Category Archives: Procurement News

How COVID Could Kill Excessive Pay?

Mind the Gap? We most certainly do but will it finally start to narrow?


Funny memes, inspiring posts and far too much fake news – we are being inundated with information to entertain, amuse, inform and frighten us while we are in lockdown or self isolation. However, one post that really caught my eye was about the value of people’s work – it reflects a sea-change in attitudes towards excessive executive pay. 


To give them their due credit, a significant number of sports stars are taking pay cuts, several celebrities have announced vast donations to Covid-19 relief efforts and even Lady Gaga is giving a percentage of profits from her beauty brand to support food banks. 

Mass altruism is a global phenomenon. 

But what about businesses? Corporate Social Responsibility (CSR), it seems, is just a way to brand businesses as caring. So far, they are doing little sharing. 

With footballers deferring 50% of their pay and tennis ace Roger Federer donating 1 million Swiss francs to vulnerable families, why aren’t we seeing CEO after CEO lining up to do something similar? 

While “ordinary” employees are being laid off or furloughed, most of the C-suite seem to be keeping quiet on pay. 

WE WILL REMEMBER THOSE WHO GET THIS RIGHT – AND THOSE WHO DON’T 

There are few exceptions… and they will not be forgotten. Those executives who are sharing the pain are doing a fantastic PR job for themselves and their businesses. 

Take the CEO of hotel group Marriott Worldwide, Arne Sorenson, who will not be taking any salary for the balance of 2020 and whose executive team will take a 50% cut in pay. While Ford’s top 300 executives will defer 20% to 50% of their salary. 

However, considering the vast pay packets these top execs earn, a cut (or a lesser sacrifice of a pay deferral), seems pathetic compared to the generosity of sports personalities and stars of stage and screen.  

Yet as more and more leadership teams follow suit, other boards will be under pressure to make similar sacrifices on salaries – or they could fall foul of public opinion. 

When News Corp Australia announced that the executive team would take a “significant” pay cut in response to Covid-19 – showing that those at the top of the pay scale are sharing the pain of those at the bottom – it also added that executive perks such as entertainment and travel events were also being halted. It doesn’t look good to be seen to be enjoying the perks of a private jet at a time like this. 

It shows just how mindful organisations are of public opinion. 

There will come a point when bosses who haven’t budged on pay and bonuses will start to stick out…and it will be noticed. 

THE BALANCE OF OPINION IS SHIFTING – AND IT’S GREAT NEWS FOR SOME ORDINARY WORKERS 

At the other end of the scale, there is beginning to be more appreciation of those in essential but poorly paid roles. Take Food City supermarkets in Chattanooga, Tennessee making headlines for giving its 16,000 employees a total US$3 million bonus reflecting their hard work ensuring people can still buy food at this difficult time. 

In Singapore, frontline healthcare workers – who are at a higher risk of contracting Covid-19 – will be given a special bonus of up to one month’s pay.  

Across the world, there are similar stories of those at the bottom of the pay scale finally receiving some appreciation (in the form of hard cash).  

MIND THE GAP? WE MOST CERTAINLY DO BUT WILL IT FINALLY START TO NARROW? 

With trillions of dollars wiped off the value of the global economy – and the G20 pledging to inject $5 trillion to blunt the economic impact of the coronavirus pandemic – any exec whose remuneration package is based partly on performance is in for a big financial hit. 

This could finally do something to narrow the phenomenal gap between pay at the top and bottom of organisations.  

CEOs in the USA earn 265 times more than the average worker according to Statista, while in S&P 500 Index firms this increases to is staggering 361 more for the top boss than the average rank-and-file worker. 

Yet back in the 1950s the typical CEO made only 20 times the salary of the average employee.  

SHAREHOLDERS MIGHT WIN THE DAY – AFTER SUFFERING SUCH HIGH LOSSES 

Shareholders have suffered some catastrophic losses. So they are likely to put significant pressure on executive remuneration committees to bring salaries back in line. 

Or, as global advisory firm Willis Towers Watson puts it: “there are reasonable expectations to see directional alignment in the change of realized executive pay relative to shareholder value”. 

BUT AT THE END OF THE DAY – IT’S PUBLIC OPINION THAT REALLY MATTERS 

In the UK new regulations requiring certain UK companies to disclose their executive pay ratios are also designed to shine a light on inequality. And it’s quite timely that the first reporting is this year. So, the requirement could not have come at a worse time for overpaid executives. 

With the UK’s Corporate Governance Code asking boards to create a culture which aligns company strategy with purpose and values – and explicitly requiring remuneration committees or RemCos to explain how pay policies for executives are appropriate in their annual reports – 2020 was supposed to be the year when the value of CEOs was brought into question. 

According to the Chartered Institute of Personnel and Development (CIPD) in the UK for every CEO appointed, another 100 candidates could just as ably fill the position. 

In a world where you cannot find 100 nurses or doctors or first responders to fill every vacancy, it is going to be hard for these RemCos to justify pay excess. And it is not just an issue in the UK. As with the coronavirus, this is a global issue and very much one that will dominate the corporate world in 2020. 

Want to join in on the coronavirus discussions? We have procurement and supply chain professionals from all around the world crowdsourcing confidence in our Supply Chain Crisis: Covid-19 group.

Has COVID-19 Pushed Sustainable Procurement Off The Agenda?

Is sustainability shelved for now?


The COVID-19 pandemic has caused several of the biggest issues facing the profession before February 2020 – sustainability, social procurement, and supply chain diversity – to plummet in priority while organizations refocus on cost and risk reduction.

Given that 78% of companies anticipate a financial impact due to the crisis, this sudden shift in priorities is understandable, but that doesn’t make it any less disappointing. Every profession, industry, and sector in the global economy is currently shelving sustainability projects while the crisis plays out.

Frankly, many companies are now in survival mode, and their sustainability programs are seen to have no place in that mode. Fine words such as “sustainability was once seen as a ‘nice-to-have’ but is now a business imperative” have been forgotten while corporations tighten their belts and CPOs urgently re-prioritize the two foundation stones of the supply chain: cost and risk.

We were making progress

Until a few weeks ago (which feels like a lifetime), sustainability was high on the agenda of procurement teams in organizations of every size. The global standard for sustainable procurement (ISO 20400) launched with great fanfare and has been gaining momentum, while major procurement conferences such as the now-cancelled ISM2020 boasted several sessions on sustainable or social procurement. Modern CPOs followed the mantra “value beyond cost reduction” while those who were solely focused on cost were seen as old-fashioned and unimaginative.

In the training space, most supply management qualifications and certifications offered by industry bodies such as ISM and CIPS included a sustainability module, ensuring that young people coming into the industry understood and valued this aspect of the job.   

The big unknown is whether sustainability initiatives are simply on-hold and will resume once this crisis is over, or if they will be shelved for the long-term as organizations slowly claw their way back to their previous levels of profitability.

Long-term consequences

It’s difficult to predict timelines as no country (except perhaps China) has yet moved onto the economic recovery stage of the COVID-19 crisis, but the big question is whether the world will actually move backward in terms of sustainability. Take, for example, a mine site that is considering powering its operation with renewable energy rather than fossil fuels. With profits and jobs under threat, the decision will likely be driven less by environmental concerns and more by cost and risk: decision-makers will choose to stick with what they know, for the lowest-possible cost.

Environmental consequences aside, the thriving network of small to medium-sized suppliers that has sprung up in response to organizations’ wish to source from sustainable, ethical, social, and diverse suppliers will now be in dire trouble. With sustainability no longer a priority for their customers, their market is disappearing as we speak.

Rebuild the foundations, but don’t neglect sustainability

Realistically, we cannot expect organizations to reanimate their sustainable procurement programs until they feel like they are back on solid ground in terms of cost and risk. The feeling I have received in the past two weeks when talking with Una’s members is that sustainability is once again a “nice to have” that will have to wait patiently while the building blocks of the procurement pyramid – cost down and risk mitigation – are cemented back into place.

It is possible, however, to do both at once. Joining a Group Purchasing Organisation (GPO) can complement and amplify the strategies organizations have in place to tackle immediate cost and risk concerns such as:

  • dealing with inevitable price rises as the supply/demand equilibrium changes
  • securing access to high-demand goods and services as suppliers are overwhelmed
  • connecting with $100 billion in buying power to help ensure suppliers prioritize your organization when volume is running low.

Beyond these immediate concerns, a GPO can work on your behalf to maintain and improve critically-important relationships with suppliers. Already, supplier relationship management (SRM) is proving to be a defining factor in maintaining continuity of supply amid massive global disruption. It is also a channel through which sustainability discussions can continue.

An increase in buying power means more choice: sustainability and social procurement will not necessarily have to fall by the wayside, while ensuring diversity in the supply base is a key strategy in reducing risk and increasing resilience throughout the supply chain.

Una’s lights are on for our customers during the COVID-19 crisis. Click here to access our COVID-19 updates and information about supply chain disruptions. 


How Procurement Can Deliver Social Impact Through Sustainable Sourcing

How can procurement teams use purchasing power to improve an organisation’s sustainability and social impact?


Across industries Chief Procurement Officers are assuming the responsibility for their firm’s sustainability and social impact objectives. All while continuing to identify the best price, vendor and value for each transaction. 

Businesses are grappling with pressure from investors, employees and customers to generate greater shared value and to help address the world’s most pressing societal challenges – like climate change and social inequality. And procurement teams have to find answers. 

Amidst movements like ‘procurement with purpose’ or the Sustainable Procurement Pledge, more executives are turning to procurement teams to drive their company’s social impact agenda and help achieve their sustainability targets. 

In fact, commitments to sustainable procurement increased by 81% between 2016 to 2019. 

This has been fuelled by a rise in executive-level support. Just 13% of respondents in the 2019 Sustainable Procurement Barometer cited leadership buy-in as a challenge to sustainable procurement, compared to 50% In 2013.  

By nature, not all social impact initiatives can be implemented overnight. Here’s a look at how procurement teams can execute immediate, evergreen and long-term strategies to use the function’s immense purchasing power to improve their company’s societal and sustainability impact.

Immediate impact

First, procurement teams must ensure that their strategies align with the company’s larger social or sustainability goals. By working with social impact enterprises like Givewith, procurement teams can identify issue areas that are financially material to the firm. 

Then they can embed Givewith’s social impact programmes directly into their RFPs – requesting the supplier allocates a percentage of the transaction to a pre-vetted non-profit, social enterprise or NGO – to generate new funding for the cause and advance the company’s corporate commitments. 

By adopting social impact sourcing solutions, companies can appease both Chief Financial Officers and CSR leads by simultaneously catalysing social progress and generating cross-company value. 

Suppliers are very willing to support these initiatives on behalf of the buyer in these negotiations because social impact generates shared value and helps advance their company’s KPIs.

As companies continue to adopt strategies that mitigate risk – which can take years to fully implement – they can immediately advance business-relevant causes entirely outside of their supply chain operations by funding programmes of interest to their causes, such as those that allow 500 girls of colour to attend coding workshops in 13 cities across the United States. 

Evergreen opportunities

In addition to social impact sourcing, procurement teams should consistently seek ways to improve supply chain diversity, transparency and sustainability. 

Using software solutions like SAP Ariba can help companies vet unethical suppliers that spur slavery, poverty or inequality. Likewise, adopting buyer solutions like EcoVadis can help companies gain insights into the intricacies of their global supply chains and see the ethical and environmental performance of their vendors. 

In addition to pre-emptive vetting, procurement teams should consistently monitor and measure their suppliers’ performance to track sustainability results. Tracking and measuring this data over time can help the company manage risk and improve its operations. 

Long-term strategies

Following in the footsteps of international frameworks like the UN Sustainable Development Goals, the world’s largest, most forward-looking companies are beginning to adopt timelines for achieving their social impact and sustainability goals. 

This is a big opportunity for procurement. It can become a strategic arm of its organisation by working closely with the company’s executive team, financial decision-makers and social responsibility leaders to set sustainable procurement benchmarks and calculate how these efforts are advancing the company’s larger mission.  

In addition, procurement teams should also work closely with their suppliers to identify ambitious yet realistic goals that benefit both parties. 

They can encourage opportunities to co-create and co-innovate with suppliers on sustainable solutions.

As the pressure on businesses to help solve the world’s most pressing challenges continues to grow, so will the pressure for procurement to act ethically and more sustainably.

That’s why procurement leaders need to adopt social impact sourcing strategies that will benefit their business today and well into the future. 

Life At The Coronavirus Epicentre: Is This A Glimpse Into Our Future?

Are you ready for what’s to come? …


Every day, those of us in Australia, the US and Europe are increasingly feeling the full force of the coronavirus. In Italy, where the situation has escalated, the country has been fully quarantined. Countries all over the world are implementing strict restrictions on incoming travellers, and with no end in sight, the stock market continues to plummet.

One Procurious member who has already survived the worst of the crisis, and has come out the other side, is Paul Ryder, President of the International College of Finance at the Bank of China in Shanghai. Paul shared his fascinating story with us about what he’s experienced during the last few months, including special intel on China’s current supply chain situation. His insights are perhaps a glimpse into our future … will we be able to get the coronavirus under control, or will the sacrifice feel too great? 

When the news broke … 

The scenes of chaos we’ve seen worldwide and even worse, the harrowing decisions Italian doctors are now having to make, have become what we all now accept as consequences of the outbreak. But in stark contrast, Paul says that when the virus broke out in China, he felt the response was quite controlled: 


Want to hear more of Paul’s fascinating story? Join our exclusive Supply Chain Crisis: Covid-19 group. We’ve gathered together the world’s foremost experts on all things supply chain, risk, business and people, and we’ll be presenting their insights and daily industry-relevant news over an 8-week content series via the group. You’ll also have the support of thousands of your procurement peers, world-wide. 

We’re stronger together. Join us now. 


Rise Of The Procurement Ecosystem

Why is an ecosystem approach better than an end-to-end source-to-settle (S2S) suite in procurement and buying?


Digitisation of procurement and sourcing is in full swing. And the applications that provide these services are booming.

But these vendors typically offer full end-to-end source-to-settle (S2S) suites, with only part of their solution dedicated to procurement and sourcing. 

In the latest ‘2019 Gartner Magic Quadrant for Procure-to-Pay Suites’, only 59 per cent of respondents indicated that they used a sole solution for their P2P processes. 

But times are changing. And the days of an end-to-end S2S suite are coming to an end.

According to Gartner’s report, Don’t Assume You Have to Use an S2S Suite to Digitalise Procurement and Sourcing, ‘By 2021, the major source-to-settle providers will all offer extensive APIs and rearchitect their solutions to provide “unifying platforms” rather than one-size-fits-all solutions.’ 

There may be some organisations in which a sole S2S suite works just fine for their sourcing and procurement needs. But for the majority of larger organisations, and especially those operating on a global scale, that’s not the case.

Change your view of integration

According to the Gartner report Don’t Assume You Have to Use an S2S Suite to Digitalise Procurement and Sourcing, ‘One of the main reasons that buying organisations are attracted to the full suites is to minimise integrations. While this is understandable, it can’t be prioritised over having the right solutions.’

More advanced applications, like Basware’s, are built with integration in mind. In the 2019 Gartner Magic Quadrant for Procure-to-Pay Suites report, Basware won awards for our strong integration capabilities. 

We received positive feedback from customers as to our integration abilities with back-end ERP systems, especially.

Basware solutions come with certified ERP intelligence, enabling seamless interoperability with the world’s leading ERP systems, including SAP, Oracle and Microsoft Dynamics. 

But our network of plug-ins also allows customers to pick and choose, then plug in, the applications and solutions that best fit their needs.

And while we’re proud of our history of innovation and P2P solutions, we’re also aware that in order to remain a leader in our field we’ve got to adapt and understand how we fit into the larger landscape of the future of S2S.

Gartner supports this sort of ecosystem of preconnected partners. And though this may cause a conflict for many S2S vendors, that’s not the case with Basware. 

We agree that ERP omnisuites have failed customers and believe that S2S suites will, too. Instead, we’re offering customers Networked P2P with a strong API framework and 100 per cent spend capture. 

Using this as the core solution, customers can build category-specific strategies to use the latest innovations such as cognitive sourcing, services governance or contingent workforce management, while capturing all spend into a single platform.

Consider a specialist

A ‘one size fits all’ approach might seem like an easy solution to your S2S problems. But this sort of blanket approach isn’t practical. It’s clear that no vendor offers a full S2S suite that is best in class across all modules. 

By going with a full S2S suite, customers are locking themselves into suites of uneven quality that will often take years to roll out.

This can lead to low and slow adoption rates.

And in order to achieve user adoption, Gartner says you ‘should focus on finding solutions that fits your buying organisation’s needs as closely as possible. This means that, in many areas, it makes sense to consider alternative specialist solutions to replace or — in some cases complement — the suite offerings.’

At Basware, we firmly believe in a future in which a microservices architecture will enable customers to manage vendors and spend in a core spend management platform like ours but also allow them to capitalise on the latest in specialist services. 

This could include:

  • Solutions for complex sourcing categories, like packaging and logistics
  • Linkages via API to data sources addressing sustainability, supplier diversity and other dimensions of supplier risk
  • Procurement savings forecasting.

Out of 13 vendors, Basware was awarded many top placings in ‘Gartner’s “Critical Capabilities for Procure-to-Pay Suites 2019”’.

These placings include the following, among others: 

  • #1 for AP Automation (Critical Capability)
  • #1 in Partner Ecosystem (Critical Capability)
  • #1 for Supply Chain Financing (Critical Capability) 
  • Tied for #1 in Integration (Critical Capability).

Next steps in your S2S ecosystem journey

As organisations become more comfortable with an ecosystem approach to procurement and sourcing technologies, they can also begin to understand their vendor’s partner ecosystem and how it aligns their roadmap.

Leading procure-to-pay vendors have established ecosystems with many preconnected and verified partners across various application markets. This includes partners such as ERP vendors, tax engines, supplier data providers and strategic sourcing application vendors.

To understand the value you can derive from a vendor’s product ecosystems, and to evaluate the effectiveness of its community, Gartner recommends requesting the following:

  • Data from the vendor outlining the number of ecosystem participants, the trajectory at which the ecosystem is growing and insight into those that use it regularly.
  • Metrics that disclose the number and frequency of documents, components or templates being uploaded by the vendor to the community (often called an online library).
  • A summary of the past three years of product updates originating from, or inspired by, suggestions from ecosystem partners.
  • Customer references that you can contact directly for an assessment of the vendor’s product ecosystems, and any user groups that they may participate in.

Ready to learn more? Read more about Basware’s rankings in the Gartner “Critical Capabilities for Procure-to-Pay Suites 2019” report. Download now.

Questions? Contact us! We’re here to help as you navigate the changes of P2P ecosystems.

10 Critical Skills Your Procurement Team Needs Right Now

And how to get them in less than ½ an hour, with a $0 training budget

As procurement leaders or influencers, we all know that upskilling is critical to our success and that of our team. And with the skills required to succeed in procurement rapidly shifting from a technical focus to more soft skills, it can be easy to feel overwhelmed by what’s required and how to achieve it. Common concerns we all experience are: 

Where do I even start with training? 

Who will pay for it? 

Can I (or my team) afford the time away from our day jobs right now – or ever? 

One of the world’s most celebrated thought leaders on human performance, Sir Clive Woodward, believes he has the answer to all of these questions – and it isn’t as complex as it seems. Sir Clive, who shot to fame after coaching England’s rugby team to their infamous victory over Australia in the 2003 World Cup, believes that when it comes to training, we get it all wrong. Instead of focusing on a few areas intensely, he says, and diverting all of our resources to them, we should instead focus on doing many things, 1% better. For example, instead of putting your team through a technical training course that might take months to complete, you could focus on a number of short, soft-skill focused sessions that will lift your team’s capability in a number of areas in a short amount of time. 

But what might this look like? We surveyed a number of influential procurement leaders and managers, and gave them an interesting challenge: How would you upskill your team in half an hour or less, with a $0 training budget? 

Here’s the skills they told us were most critical – and more importantly, how they’d rise to Sir Clive’s challenge and do multiple things that 1% better. 

1. Customer focus skills

The problem

In days gone by, procurement was seen as an internally-focused, cost-saving function only. Not only were customers not our focus, but in many ways, we sometimes felt we worked against them; with the finance team putting relentless pressure on us to slash costs, regardless of the impact on our end customer. Now? This couldn’t be further from the truth. 

Yet still, given that the focus on cost and risk is ever-prevalent, it can still be hard to step outside of our own perspective and put ourselves in others’ shoes, says Keith Bird, former CPO and General Manager – Commercial of Queensland Rail and Managing Director of The Faculty, a procurement management consultancy. 

‘A customer focus is critical,’ says Keith, ‘Because in procurement, a customer focus equates to increased value delivered.’ 

The quick upskill solution 

But how do you get your team to see that? One great way is to do an empathy mapping exercise, where you map your customer’s experience with your service, and try to understand their pain points (and what you can do about them). 

There’s tonnes of empathy mapping exercises available on the internet that can be completed within half an hour or less. Here’s one from Atlassian you can try right away.

2. Category management skills 

The problem 

Keith Bird, Managing Director of The Faculty and lifelong procurement specialist, acknowledges that category management remains a critical skill within the procurement profession. And, according to Keith, it certainly is one that requires honing: 

‘We all know there’s a lot of work that goes into managing any given category. From industry reviews to spend analysis, it can be a time-consuming – yet critical – exercise.’ 

The quick upskill solution 

Yet when it comes to upskilling, says Keith, the secret may not be what you think. Instead of focusing on developing the skill of category management itself, some quick wins can be gained from how category management is discussed with anyone outside of the procurement team: 

‘Many procurement professionals that I’ve seen feel the need to extensively detail their category management activities to their stakeholders. This is not only not necessary, but stakeholders find it confusing – it isn’t what they want.’ 

According to Keith, one of the best skills that can be gained from a category management perspective is how it’s presented to stakeholders: 

‘When you’re speaking with stakeholders, you need to talk their language, which, usually, is in commercial outcomes. How is your category management going to deliver them the outcomes they need?’ 

‘Discussing your activities, or rather, not discussing your activities and talking in outcomes can be a monumental win from a category management perspective.’ 

3. Problem solving skills 

The problem 

Problem solving skills are an attribute often left off job descriptions, but with procurement only increasing in complexity, they shouldn’t be. In fact, so critical are problem solving skills, that the World Economic Forum rates them as the number one skill we all need to thrive in 2020 and beyond. 

Acquiring them doesn’t have to be difficult, says Euan Granger, Senior Strategic Buyer at Soil Machine Dynamics and key contributor to Procurious, the world’s largest procurement professional network. In fact, sometimes it’s simply better to take a break from the professional nature of our workplaces, and step outside our comfort zones with a fun activity. 

The quick upskill solution 

One that Euan has used many times and recommends is the simple ‘marshmallow and spaghetti’ challenge. For this exercise, you’ll need to purchase 20 sticks of dry spaghetti, a roll of tape, a ball of string and a marshmallow. Then, set your team a challenge: Build a free-standing tower using the materials provided! 

Whenever Euan has used this activity for his team, he always recommends that they go away and think about how they can use the skills they’ve learnt in their job. 

‘It’s not so much about who does it or doesn’t do it, but more about working together to solve a problem, and thinking about things in a different way. We always need that approach when solving new problems.’ 

4. Negotiation skills

The problem 

As procurement professionals, we all know that negotiation is both an art and a science. In any given negotiation, we’re always delicately balancing the needs of our organisation, risks, costs, sustainability and the expectations of the supplier. It certainly isn’t easy – and it certainly requires great focus and dedication to execute. 

The quick upskill solution 

Even if you’re already a skilled negotiator, there’s always more you can learn, says Ron Brown,’ former General Manager at MMG Mining and lead consultant at The Faculty. One great way to upskill your team on this is to do the ‘Price of $1’ exercise, a simple exercise that shows how important preparation, communication and a solid command of facts is in a negotiation.  

Here’s how to run the exercise: 

  1. Have two people/players sit back to back, but far enough apart that they can’t hear each other
  2. Select a third person as a ‘go between.’ This person goes to the other two players and asks for their bid (the problem being neither player knows what they’re bidding for). 
  3. Bidding starts. Bidding can start at as little as 1 cent. Each player has three bids in each round if they want, and they can decide not to bid higher than the other player. 
  4. At the end of three bids, one player is awarded the round. Complete three rounds. At the end of three rounds, explain to players that they were bidding for $1.

‘The results of this exercise are always pretty interesting,’ Says Ron. ‘In that often, people end up bidding far more than $1, for that $1. The actual winner is the one that has spent less over the three rounds.’

‘What it teaches you, really, is that a desire to win can drive us, and how crucial information can be to overcome this.’ 

5. Commercial acumen 

The problem 

Commercial skills, or more accurately, commercial acumen, is one of the most essential attributes for any procurement professional or leader, says Keith. There’s a few reasons for this, he believes: 

‘Over the years, we’ve had a lot of shrinkage in companies, meaning that pretty much every procurement team is now expected to do more with less.’ 

‘This means that there’s an increasing pressure on every single person, from those at the top to new graduates, to show they’re adding commercial value in everything they do.’ 

But what does ‘commercial value’ mean? Keith says that it’s far more than just simply an ability to understand financial basics: 

‘Commercial value is way beyond simply profit and loss. It’s an ability to understand the whole value chain more broadly, for example, it’s not simply the “cost of acquisition” from a procurement perspective, but the value of that acquisition or product to the whole business.’ 

The quick upskill solution

Given the broad and complex nature of commercial acumen, Keith believes this can be a hard area to train. A great place to start, though, is to align your job, and more broadly, the strategic priorities and activities of your function, to those of the organisation’s C-suite. ‘If what you are doing wouldn’t matter to the CEO,’ Says Keith. ‘Why are you doing it?’ 

One great way to put this into action is what Google calls ‘OKRs’ (Objectives and Key Results). When creating OKRs, you create a set of audacious, measurable goals that put your stakeholders/customers first, and align those with your organisation’s priorities. You then follow up your OKRs regularly; checking in monthly to see how you’re going. 

There’s lots of templates and tools on the internet that can help you set up OKRs. Atlassian have developed some great downloadables on this, or you can try these ones from Rework.

6. Supplier relationships

The problem

With supply chains becoming more and more complex, relationships are now not just important, but critical, in everything we do in procurement. Yet managing them has never been more challenging – we’ve got to coordinate tens, if not hundreds of moving parts that may include multiple vertical and horizontal dependencies; all poised to break at any minute if we don’t get things right. 

The quick upskill solution

Given the complex and often personal interdependencies between supplier relationships, often learning from others with experience is the only upskilling solution, says Keith Bird, Managing Director of the Faculty. To do so, joining an industry networking program can provide unparalleled benefits. 

One such program is The Faculty’s own Roundtable program, which connects and facilitates collaboration between the top CPOs across Australia. 

‘Using our program,’ Says Keith. ‘I’ve seen some of our partners begin, and also navigate exceedingly complex supplier relationships that wouldn’t have been able to do otherwise.’ 

The Faculty’s roundtables are free for member organisations. 

7. Stakeholder management

The problem

Every single person in procurement has come across issues with stakeholder management at one stage. While it’s easy to blame individuals, though, often issues arise from a lack of information – and ultimately, it’s easy for a stakeholder to get frustrated and hard for them to see the value procurement add when they simply don’t know what’s happening. 

The quick upskill solution

The issue with stakeholder management, says Ron Brown, lead consultant at The Faculty, is that often, it’s just impossible to know who knows what. ‘So you’ll often find that there are people hiding in plain sight that are clueless and getting frustrated, yet you assume they know everything. Or worse, you assume they don’t need to know.’ 

One way to overcome this is to build out what’s called a RACI board (Responsible, Accountable, Consulted and Informed). To do this, you’ll need to: 

  1. Select one of the big categories for your procurement team
  2. Write a list of stakeholders on post-its. Remember to include everyone who will be involved in the category from beginning to end, no matter how tenuous the link. 
  3. Then map out the board, moving everyone around to create a map of whose involved, who knows what, and critically, who needs information and might not be getting it. 

‘Keeping stakeholders appropriately consulted and informed is a great first step in stakeholder management,’ says Ron. 

8. Digital skills 

The problem

In 2020 and beyond, there’s simply no hiding from digital. In our personal lives, we’re using it every day, and more and more, we’re doing so in our work lives as well. Increasingly, all large organisations are undergoing massive digital transformations, if they haven’t already, and procurement will need to play a big part in these, from a supplier to an implementation perspective. In short: if you haven’t got digital skills, you need to get them, pronto. 

The quick upskill solution

But what is ‘digital’? Where do you ever start?!? While the prospect sounds daunting, it needn’t be, says Euan, Procurious contributor. There’s literally millions of free resources online, and a great place to start is with a brand that’s synonymous with the internet itself: Google. 

Google’s Digital Garage provides a plethora of free, expert-level training on digital, on a range of topics that include everything from the digital business security to the basics of coding. You can check out their entire offering here.

Keith Bird, Managing Director at The Faculty, also believes that seeking out a digital mentor can be a great way to upskill: 

‘Admittedly, digital isn’t my forte, so I’ve expressly sought out a digital native in our business who can teach me. A mentoring relationship can really be between anyone; it doesn’t have to be an older person mentoring a younger person’ 

‘It’s more about a person with expertise mentoring someone who doesn’t yet have that knowledge.’ 

9. Technology 

The problem 

We’ve been hearing the same message for some years now: technology is fast replacing jobs! Artificial intelligence (AI) is coming! But those that usher these warnings are in fact a bit behind: there’s already a significant amount of AI in most systems we use, so the challenge now is to learn how to work with it. 

There’s no doubt that technology is evolving – and fast. We all need to keep up to date with the latest, but what’s the latest? And how do we keep up with it?

The quick upskill solution 

For all the latest in technology, says Keith Bird, Managing Director at The Faculty, you can’t go past industry podcasts. 

Keith recommends joining Procurious to keep up with the latest, or alternatively, listening to The Art of Procurement podcast.

10. Finance

The problem

Many outside of procurement might say that procurement and finance work in tandem – but from inside procurement teams, things often look quite different. In fact, when we’re trying to focus on strategic value, our relationship with finance can look a little strained, especially if the value we’re adding can’t immediately be quantified on the bottom line. 

The quick upskill solution 

For some skills, Euan Granger, Procurious contributor, says, ‘there’s no substitute for some good, old-fashioned peer-to-peer learning. And when you’re trying to learn about finance, there’s no better place to go than, well, finance.’ 

If you haven’t facilitated such a session before, Euan recommends, then try the following: 

  1. Get finance and procurement in the same room – this is key. 
  2. Get finance to do a toolbox talk on the key terms and metrics that matter to them – and how procurement can impact these. 
  3. Ask any questions and air any concerns – build the relationship and agree on ways of working moving forward. 

‘You’ll be surprised at what can be achieved in one simple meeting,’ Says Euan. Often being in the same room talking about what matters to each other is all that it takes for walls to come down and bridges to be built.’ 

 More skills, more solutions 

With procurement increasing in complexity, we all need to focus on rapid upskilling to continue to add value and stay relevant. To hear from the greatest minds in our industry, plus hear more of Sir Clive Woodward’s game-changing performance suggestions, join us at Procurious’ Big Ideas Summit 2020 on March 11 in London. 

Can’t make it? We’re currently offering digital delegate passes for free. Grab yours here now.

Contributors

Keith Bird, Managing Director of The Faculty. Connect with Keith on Linkedin here.

Ron Brown, Principal Advisor at The Faculty. Connect with Ron Brown here.

Euan Granger, Procurious Contributor. Connect with Euan here.

Want more? 

Want to learn more about in-demand skills in procurement, and all the other exciting developments and big issues our industry is facing this year? Join us to hear from Sir Clive Woodward and a stellar lineup of other speakers and industry leaders at our Big Ideas Summit. Digital Delegate tickets are currently available at no cost (for a limited time). 

If you’re interested in accessing market-leading industry insights and networking, express your interest in joining The Faculty’s Roundtable Program here. 

The One Where Friends Taught Procurement How To Negotiate

The six main characters in Friends may have given us a lot of laughs over the years, but they can also teach procurement professionals a few things about the fine art of negotiation. 


In this article, we look back on seven episodes in which Rachel, Ross, Phoebe, Joey, Chandler and Monica showed procurement what to do and (more often than not) what not to do when negotiating with suppliers. 

1. Having a back-up plan (or two)

In The One With The Proposal, Phoebe reveals to Rachel that she has a pact with Joey to get married if they’re both still single at 40. When Rachel tries to secure Ross as her back-up, he reveals that he is also committed to Phoebe, who rightly points out ‘it’s good sense to back up your back-up!’

A single-source supply situation is a dangerous place for procurement professionals to find themselves. Firstly, it doesn’t account for any risk factors such as trade tariffs, political and economic instability or natural disasters that could gravely impact the efficiency of your supply chain. Secondly, no matter what your benchmarking data tells you about costing, having one supplier puts procurement in a vulnerable negotiating position, particularly when the time comes for contract renewals.

2. The importance of being realistic

In The One After Vegas, Rachel and Ross accidentally get married following a particularly big night out in Sin City. And Ross, desperate to avoid his third divorce in two years, embarks on a ludicrous campaign to convince Rachel to stay married to him. During their negotiation, he first points out the proximity of the ‘Mrs’ and ‘Miss’ checkboxes on forms, (‘How is this going to affect you? … It’s right next to it!’) and then proceeds to offer her all the gifts from the wedding registry.

Before entering into negotiations, procurement professionals must clearly define their strategy, be realistic about their expectations and treat their suppliers fairly. Pushing your suppliers too hard can be counterproductive and destroy the potential value to be gained in long-term strategic relationships.

3. Being flexible

In The One With Ross’s Denial, Monica and Chandler attempt to negotiate what to do with their spare bedroom. Monica dreams of a beautiful guest room whilst Chandler wants to create an old-school arcade. The discussion ultimately reveals Monica’s unwillingness to compromise on anything related to the apartment’s interior. 

Rigid supplier onboarding can be time-consuming and costly, particularly for SMEs. Similarly, inflexible payment terms might eliminate certain suppliers who depend on fast payments. For procurement to successfully engage with a diverse supplier base and drive innovation through their suppliers, processes need to be adaptable and accommodating.

4. Controlling your temper

In The One With Ross’s Wedding, Ross and Emily’s parents squabble over wedding costs, a conversation that eventually descends into a sparring match (‘I could kill you with my thumb’). Ross is forced to intervene and mediate the discussions, threatening both couples with ‘no grandchildren!’ if they cannot reach an understanding.

Focusing solely on costs during a negotiation is a recipe for conflict. In today’s world, procurement depends on long-lasting and meaningful relationships with suppliers to drive creativity, sustainability and efficiency. When tensions are running particularly high, it might be worth bringing in a mediator or involving senior leadership, but this is not a decision to be taken lightly by procurement – the basis of your supplier relationship will determine its future dynamic.

5. Doing your homework

In The One With The Embryos, Chandler and Joey agree to get rid of their pet chick and duck if they win the lightning round of Ross’s quiz. Rachel and Monica end up losing the game (and their apartment) simply because they don’t know Chandler’s job title (‘he’s a transponster!’)

It might be tempting to save yourself preparation time and come to a supplier meeting unprepared with the intention to ‘wing it’. But be warned, it will come back to bite you when you’re unable to answer key questions, stalling for time, and don’t have your BATNA (Best Alternative to a Negotiated Agreement) prepared. 

To guarantee the best outcome, it’s important to do your homework and understand the supplier’s aspirations, weaknesses and objectives. Negotiation expert Erich Rifenburgh recommends that your preparation time should be at least three times longer than the time spent in the negotiation itself. 

6. Being efficient

In The One With The Jellyfish, Ross reveals he never finished reading a letter from Rachel that outlined her reconciliation terms. ‘I was tired, and you had rambled on for eighteen pages . . . front and back!’ The letter’s complexity and ambiguity results in the couple breaking up (yet again). 

If you’ve reached the end of a negotiation and the terms are unclear, or some of the participants are dissatisfied, something’s gone wrong.

Ideally, both parties will walk away with complete clarity on the agreement in terms of costings, deliverables and timelines, which should all be reconfirmed at the end of a negotiation. Procurement professionals must also question whether the final agreement has longevity and be certain that no value has been left on the table.

7. Knowing your limits

 In The One With The Ring, Chandler identifies the perfect engagement ring for Monica and is determined to secure it at all costs. When another shopper snaps the ring up first, Chandler and Phoebe go to huge lengths to negotiate its return, unwilling to compromise on an unsuitable alternative. 

Being flexible doesn’t mean being a pushover, and it certainly doesn’t mean giving in to pressure or abandoning your company’s values or protocols for the sake of a quick negotiation win. To deliver top-quality products and services, procurement professionals must know their limits and stick by them, without compromising on maintaining supplier relationships. It’s a fine line to walk, but the payoff is worth it. You’ll earn respect from your suppliers, maintain integrity and keep your internal stakeholders happy.

Get in touch with UNA to discuss how a Group Purchasing Organisation can leverage the power of bulk purchasing to negotiate on your behalf. 

How To Increase Your Procurement Salary This Year

Negotiating your salary can be scary… but not doing so can be an even bigger risk and really add up over time.

Money. We all might agree that it doesn’t buy happiness at work and it’s far from the most important benefit in our jobs, but still, it’s a big indicator of the value we bring. And while as procurement professionals, we’re more than happy to put on our poker face, sit at the negotiating table and secure the best deal for our business, many of us are less inclined to employ these tactics when it comes to our own pay rises. 

But why? 

Negotiating for ourselves is challenging, and research shows an incredible two-thirds of us never do it. In a perfect world, we wouldn’t have to – our hard work and effort would be automatically rewarded. But our jobs, just like our supplier negotiations, are about business, so it follows that we’d need to regularly present our business case to secure the best deal. 

Doing so can be scary, but not doing so can be even scarier and over time, really add up. An example: a study conducted by Linda Babcock showed that only 7% of women attempt to negotiate their salary, as opposed to 57% of men. Over a career, this can make a huge difference – the same research showed that people who asked were able to increase their salary by over 7%. 

But even if we know we should be negotiating for ourselves, doing so can be a completely different beast. So if you want to increase your procurement salary this year, here’s how we recommend you do it: 

Step 1: Beforehand – Thoroughly prepare

A salary negotiation is like any other big-ticket negotiation in your procurement career and as such, you need to be prepared. Although salary can feel very personal, when you’re preparing you need to keep it professional and build a business case for what you’re going to ask for. Here’s how you do that: 

Understand your market value 

Before you enter any negotiations, you need to know your numbers, and salaries are no different. But where do you get this information from? 

Websites such as Payscale can be a great starting point when it comes to salary ranges. It can also be extremely helpful to talk to specialist procurement recruiters, such as those from Procurious’ recruitment partner, The Source, to understand what your market rate should be. 

After you’ve researched your range, land on exact value, ideally at the top end of the range. Why? Research shows that if you do this, you’re scientifically more likely to get closer to this amount, and when you select a number at the top of the range, you give yourself more room to negotiate. 

Once you’ve discovered your market rate, think about what you’d like to ask for as an entire package, in case the business simply isn’t able to afford the raise you’re asking for (or equally, if you value other benefits just as much). Perhaps you’d like to negotiate for more annual leave? Different flexible work conditions? Travel or different projects? Ensure you know what you’re after and have prioritised it according to your preferences. 

The last part of knowing what you’re after is considering the ‘bare minimum’ you’d accept. If you can’t get a raise, will you be ok to accept the changed benefits you’re asking for? Is nothing an acceptable outcome, as long as you know you can try again next year? Deciding on your ‘bare minimum’ can help you know when to  acquiesce your negotiations. 

Prepare your business case 

Now you’re clear on your value, it’s time to show it through preparing your business case. Many people make the mistake of defaulting to their personal circumstances or effort expounded in their business cases, but you should always focus on purely business outcomes and results. 

Your business case needn’t be long, in fact, it could be simply one page, but on it you should include: 

  • Your accomplishments, focusing on the value you added vis-a-vis the strategic priorities of your department (and even the business as a whole)
  • Any awards or other recognition you’ve received
  • Customer, stakeholder or co-worker testimonials (if you don’t have any of these, ensure you proactively ask for some).
  • A plan to achieve future objectives of the business and department.  

Once you’ve put together your business case, practice your pitch. Know inside-out how you’re adding value, and be prepared to answer any questions your manager might have (without getting defensive). Confidence will be a big part of your success, so practice definitely makes perfect. 

Get your timing right (if you can) 

Some companies mandate that salary negotiations and performance reviews go hand-in-hand. But from an HR perspective, there is always room for ‘out-of-cycle’ pay rises where they’re deemed necessary, so if possible, try to pick your timing when you’re negotiating. According to the Harvard Business Review, the best time to negotiate for a rise may be three to four months prior to your performance review, before your boss has decided what rises might be given out (NB. Team salaries often come from the same budget ‘bucket’ so getting in ahead of time might ensure there’s more available for you). 

The first rule of picking your timing is choosing a time, obviously, when your boss isn’t stressed or where you don’t have thousands of impending deadlines. Beyond this, research shows that you should choose a Thursday or Friday to negotiate, as in this part of the week people are usually more amenable to negotiation and compromise. 

Step 2: The meeting – put your best negotiation skills on

Remember the nerves you felt in your first supplier negotiation? Undoubtedly, you’ll feel those one-hundred fold when negotiating for yourself. As such, consciously employ these tactics to ensure you present your best pitch: 

Get your confidence on

Some people think of confidence as something you do – or don’t – have, but in reality there’s lots of things you can do to make sure you look and feel more confident. 

One such thing is to employ what Harvard researcher Amy Cuddy calls a ‘power pose.’ A ‘power pose is where you stand tall with your hands on your hips and your chin and chest raised. Executing one of these, even if it’s in your office prior to your negotiation, helps raise testosterone, which in turn increases confidence and reduces stress. 

You can also make sure you look and feel the part, says self-improvement researcher James Clear.  To do so, choose an outfit that makes you feel your best, and make sure you enter the negotiation room with your head held high, eye contact and a confident smile. ‘The way you enter a room can dictate how the rest of an interaction will be,’ James asserts. 

Finally, if you’re rethinking your morning coffee on your meeting day – don’t. Research shows it makes people more resistant to persuasion, so if you indulge, you might just have an easier time holding your ground! 

Listen before you ask

As you’d know from your supplier negotiations, you’re always in the best position when you’re armed with as much information as possible. Likewise, as counterintuitive as might seem, the first thing you need to do in your salary negotiation is to listen. 

What have our key successes been, you might ask. Or alternatively, what’s the road map for the future and how will be measure our success? The answers to these questions may well cause you to adjust your pitch, depending on what your manager highlights as their most crucial priorities. 

Your pitch

Now you’ve listened, it’s time for your pitch. When you’re discussing your achievements, keep everything professional and fact-based, referencing your business case as needed. 

Use your pitch to present your ‘first preference,’ whether this simply be a pay rise or a combination of pay and other conditions. Don’t mention other options as yet – these are for later down the track if negotiations don’t go as planned. Also take care not to mention anything non-business related, as relevant as it may seem (for example, I need a raise as my rent has  increased, or I need a raise because I learnt my colleague who doesn’t work half as hard earns more). Mentioning personal reasons for a pay rise will distract from the value you add to the business, which is what your salary is fundamentally about. 

Step 3: The big ask – will you get the pay rise? 

Once you’ve prepared to ask for your pay rise and presented your case, your work is almost done. But there’s still the hardest part – actually asking for the raise. How do you do that? Here’s some tips: 

Be direct 

Skirting around the topic, waiting to be asked for a number, or putting too many words into your request can all, unfortunately, be a sign you lack confidence in what you’re asking. The best way to ask for a raise is simply to ask, referencing everything you’ve presented. Try something along the lines of: 

‘Based on the evidence I’ve presented here today, including the research I did on market range, I’d like to request a pay rise to XX.’ 

Be positive, not pushy 

If the first response you get isn’t a straight yes (it almost never will be), you need to resist the urge to sound pushy, beg, or get offended or defensive. If the initial response to your request isn’t positive, ensure that stay positive and continue to lead with the value you’ve added. If you manager wants to dispute or further investigate anything you’ve presented, simply say that you’re happy to provide further evidence. 

This is especially important if you feel yourself getting emotional. Even if you have further evidence at hand, it may be better to present it at a later point when you’re feeling more composed. 

Send evidence via email 

From an HR perspective, it’s unlikely that even if your boss agrees with your request in principle, he or she will be able to approve it straight away. Also, he or she may need to provide evidence to senior management or HR as to why the decision is being made. 

To get on the front foot with this, send your manager an email after your meeting, detailing your request and your business case. Ensure you give your manager a deadline for responding, so you’ll know either way how to move the negotiations forward, if need be. 

Step 4: Dealing with a no 

When we enter a negotiation, the last thing we want is to receive is a ‘no.’ Yet at the same time, we do need to prepare for this as a possible outcome. Here’s how you do that while maintaining your professionalism and your job (if that’s your intention): 

See no as a path to yes 

When it comes to salary negotiations, it can be tempting to see a ‘no’ as a personal indictment on your performance, but according to Forbes, it’s anything but this: 

‘We’re often reluctant to negotiate past no, but we shouldn’t be. After all, it’s not really a negotiation if we’re asking for something our bargaining partner wants.’ 

‘Negotiation is a conversation whose goal is to reach an agreement with someone whose interests are not perfectly aligned with yours.’ 

If we wanted something from our supplier, would we take no as an answer? Probably not. Employ that same ethos in your salary negotiations. 

Make a counter offer 

The beauty of having pre-considered options for your negotiation means that if you get a no to your first request, you can proceed down the list. If you need to do this, continue to lead with value and sell the reasons why the benefits you’re asking for are beneficial to the business, for example, ‘Working a compressed working week has been shown to boost productivity, and I’m confident, given my track record, I can deliver that.’ 

Keep the conversation open

Did you know that some of the world’s most famous negotiations took years, and even decades to pull off? While you’re unlikely to want to wait that long for a pay rise, know that it might take some time to achieve what you’re asking for. Stay positive, make SMART goals (for example, I’d like to discuss this again in 6 months, when I’ve done XYZ) and continue building your business case. 

Have you tried to negotiate your salary? Any other tips for success? We’d love to hear them – please let us know in the comments below. 

Do you work in procurement or supply chain? Join 37,000 + procurement and supply chain professionals at Procurious today, and receive free access to the latest industry news, information, training, events and much more. 

4 Ways Procurement Can Work With Start-Ups and SMEs

Size isn’t everything when choosing suppliers.

There’s a poignant scene in The Lord of the Rings in which the Elven Queen Galadriel turns to Frodo Baggins, a frightened young hobbit, and gently reminds him that ‘even the smallest person can change the course of the future’. 

Against all odds, and to the dismay of many powerful leaders in Middle-earth, Frodo is entrusted with the monumental task of destroying the One Ring within the fires of Mount Doom. His relentless determination, unorthodox methods and the faith of his closest friends all contribute to his ultimate success. 

What can procurement take away from this? Most importantly, when it comes to selecting suppliers, size isn’t everything – something any one of the 30.2 million small businesses operating in the United States could tell you. 

Traditionally, big works with big. But companies today are recognizing that they are selling themselves short by restricting their supply base to large organisations. 

Benefits of working with SMEs and start-ups include: 

  • Small businesses are more agile and innovative because they are less confined by rigid or bureaucratic processes.
  • Improved sustainability and added social value, which benefits the local economy. This is because SMEs are likely to have a good understanding of the community in which they operate.
  • Better value for money as a result of lower admin costs and increased flexibility.
  • Capacity to deliver highly specialised solutions.
  • Closer buyer-supplier relationships.
  • Increased efficiency in terms of product cycles and the provision of services.
  • Improved supplier diversity: 45% of US-based SMEs are minority-owned businesses.

Despite the many advantages, some procurement leaders remain wary of partnering with smaller businesses due to increased risks. Others simply struggle to effectively build and nurture these partnerships.

Here are my 4 tips for procurement to build successful relationships with SMEs and start-ups. 

1. Build close relationships with your suppliers

One of the many benefits of working with smaller vendors is that it’s easier to build meaningful, lasting relationships – often directly with the CEO. These drive innovation, reduce cost and mitigate risk. 

Procurement professionals should take advantage of this through regular communication and collaboration with suppliers, particularly in the pursuit of innovation.

Negotiations, contracting and pricing are a necessary (and important) part of any buyer-supplier relationship. But meeting your suppliers in person to seek innovations will drive value for your organisation. 

In reality, you might be surprised at how much additional value a supplier can contribute when you abandon standard approaches to SRM and commit to listening and learning.

2. Pay your suppliers on time 

According to a recent study, 11% of all invoices sent by SMEs are not paid on time, which comes at a cost of over $1 trillion each year. On top of this, the research found that 7.5% of all SME invoices are written off as bad debt. 

SMEs are dependent on good cash flow. Many fail as a direct result of clients delaying payments. So paying your suppliers on time should be an absolute priority for procurement professionals.  

Similarly, procurement should be cautious about driving harsh payment and contractual terms with small businesses that may be unequipped to negotiate with large corporations. Remember SMEs are likely to deliver long-term value in other ways. 

3. Be flexible 

In order to prioritise innovation and other benefits associated with SME partnerships, procurement teams must be willing to adapt their processes to be more accommodating. 

Many corporations are accustomed to only dealing with other big companies. This leads to the assumption that only large suppliers are capable of meeting demands and managing risk.

In reality, as long as suppliers are financially secure and can deliver your requirements, your flexibility in accommodating them is the more important factor. 

Procurement teams can do this by:

  • reducing contract complexity 
  • limiting turnover thresholds and removing high insurance and health and safety requirements
  • sharing risk appropriately between buyer and supplier
  • keeping KPIs simple, concise and supportive. 

4. Mitigate potential risks fairly 

There’s no question that there are risks associated with working alongside SMEs and start-ups. But with careful consideration and forward planning, these can be mitigated. And without negative impacting prospective suppliers to a point where they are compelled to walk away.

For example, an SME might present a higher financial risk than a big supplier. These concerns can be alleviated by requiring financial due diligence and detailed discussions surrounding the company’s finances to ensure complete transparency. 

Similarly, it’s worth asking for an overview of the supplier’s recent and ongoing projects, including a first right of refusal to buy the company should it go bankrupt. Commit to regular meetings and use incentives instead of penalties. 

So, the next time you’re approached by an SME or start-up, don’t reject them on the assumption that they will be too small to meet the needs of your organisation.

Just like Frodo Baggins and the Fellowship of the Ring, an SME just might turn out to be the most valuable partnership you ever create. 

Learn about the cost savings and other benefits involved in joining a Group Purchasing Organisation (GPO) at www.una.com

A Decade In Review: Procurement In 2020

Is procurement less, just as, or more important this decade than the last? Find out as we take a walk down memory lane…

It’s the dawn of a new decade in procurement, and goodness me, how things have changed. From the digitisation of just about everything, to the introduction of big data, 2020 looks vastly different than 2010 did. 

As a former CPO and now Principal Advisor at Procurious, I’ve been at the coalface at what I can only describe as seismic changes to our profession. 

But have all the changes we’ve seen been good changes? Are we now poised to deliver more value, or will we struggle to do more with less? And are we more relevant than ever, or is technology replacing us? Here are my key observations from the last decade – and what we need to do to stay valuable going forward:

We became captivated with compliance

The last decade started for me with a bang – I was promoted to a procurement leadership role and I was, for the first time in my career, excited to be able to effect real, lasting and meaningful change. I felt that procurement could achieve much more than pumping out stock-standard contracts and controlling third-party spend. 

Yet my excitement was short-lived. As I looked around me, I found that, as a function, the procurement community just didn’t seem interested in broader, value-adding gains. Their focus was still quite shortsighted; they seemed captivated by processes and fixated on compliance. Cost-savings, contracts and the financial bottom line seemed to be the only thing on their mind.

Data made us better advisors (but some of us are still catching up)

‘Don’t ever do a job a machine can do,’ said our grandparents, as they rejoiced at the invention of the calculator. Suddenly, this advice was ringing true in our profession – we had eProcurement, cloud computing, and AI to take away a lot of our administrative work. What came in its place was the ability to deliver new and intriguing insights to our stakeholders quickly, without having to spend hours on Excel.  

As emails replaced purchase order pads, eCatalogues replaced supplier brochures and the data started to flow through, we had the information to inform our strategies and priorities. As a result, our advice and cost savings rapidly improved. 

Not everyone was a fan, though. Many of us became concerned with job stability, and some believed that technology had created more issues than it solved.

From cost reduction to value creation

As the decade progressed, our relentless focus on cost reduction started to feel like a grind, not least for suppliers who, feeling bullied by our negotiation techniques, began to speak out and cry ‘no more.’ These changes meant that the expectations of our stakeholders started to move away from a focus purely on cost.

The good news was that our newly automated processes helped us to shift our attention from cost-savings to value creation. Before we knew it, we’d automated our entire P2P process, freeing us up to build strategic partnerships with both our suppliers and stakeholders. 

In uncertain business and economic times, the focus on value creation was exactly what our profession needed. It lifted us from a ‘necessary evil’ in some people’s eyes to a strategic partner. On the whole, though, that transformation is far from complete, and many of us still have some work to do in this regard.

It’s more about the people than ever

Behind the analysis, behind the processes, and behind the cost-savings, procurement has always been a people profession. And perhaps the best news of the decade is that with all the change, with all the uncertainty and with the new and heightened expectations, procurement professionals have shown themselves to be resilient, optimistic and future-focused. 

We’ve embraced digital disruption. We’ve welcomed, with open arms, technology that makes us more efficient, and we’ve also onboarded stakeholders and suppliers to use that technology, meaning we’re adding even more value. 

But we’ve also realised where technology stops and that is, sometimes, with communication. We now understand how critical our ‘soft skills’ are at work, and that technology can’t replace the influential conversations we need to have to convince an operational manager to change suppliers, or make a case to buy more sustainably. Technology is transformative, but then again, so is our ability to negotiate.

As for 2020 and beyond?

With digitisation and automation now happening at breakneck speed, many of us have embraced the change but fear what’s coming next. Soon, virtual assistants will abound, collaborative marketplaces will proliferate. What value will we add, then? 

The answer is plenty. One thing we’ve learnt from the last decade is that in uncertain times, human relationships prevail, and that’s where our strength and expertise shine through. Armed with our best people skills, the sky is really the limit for procurement. As a function, 2020 and beyond could see us having more strategic influence than ever before. 

What other changes have you seen in the last decade? Do you think that procurement is less, just as, or more important this decade than last? Tell us what you think in the comments below.

Helen Mackenzie is a Principal Advisor at Procurious and a former senior leader in UK public procurement. Connect with her on LinkedIn and join Procurious to hear more of her unique insights.