Don’t get caught out by using a template without thinking! The result can give you nightmares!
I was recently asked to describe the worst procurement project that I had been involved in. While not the worst, this story certainly highlights the importance of engaging procurement teams early and not blindly following templates!
I was in the role of a buyer supporting an internal customer and I took over a project at evaluation stage. The evaluation team had individually assessed the bid responses and the team had convened to discuss their findings. A weighted attribute model had been selected to help identify what criterion was valued over others.
The template bites back
The ranking of the bidders evaluation scores were revealed and the project lead was shocked. “This isn’t what we expected? These aren’t the best proposals that meet our needs, these are the weaker ones?!”
The problem became obvious. The boilerplate RFP template had been used without tailoring it to the business problem they were trying to solve. Most critically, the evaluation criteria percentage hadn’t been adjusted at all. Innovation was set to a default of 10% whe,n in fact, it was the most critical factor the project!
What is a weighted attribute evaluation model?
A weighted attribute model is one of the most common evaluation models used in procurement. It helps to identify the proposals that best meet the most important buyer needs. This could be requirements like: methodology, project management, resources or capability and capacity.
A typical weighted attribute model looks like:
Project team and key personnel
There are many different ways to approach the weighted attribute model. (Top tip, don’t put the percentages too close together otherwise there will be nothing distinguishing one bid from the other!)
What would you do if you inherited a project at evaluation stage and the RFP didn’t actually ask the market for the complete picture that you wanted? And worse, that the evaluation criteria didn’t match the most critical elements of the project?
These were my options:
Cancel and start again – this wouldn’t be fair to the bidders who had already put in the time and effort to respond.
Reissue parts of the tender questions – the submission deadline had already passed but we could seek further clarification responses. This would risk our reputation in the market.
Create a second stage and interview each bidder to better understand their proposal and see if they have the capacity and ability to scale up to our desired needs.
We selected option number 3 and ran a second stage process. The presentations enabled us to drill down into each proposal and meet with each company face to face. They were able to better understand the objectives we were seeking and we were able to better understand the solution they were putting forward.
3 lessons that changed the way I approach evaluation
One size doesn’t fit all
A template with a generic model can’t be assumed to meet the needs of every project in every situation. It’s important that the needs are thought about carefully and that the right model is chosen for the project.
Clunky RFP processes aren’t always right – especially where innovation is required
Consider what parts of the process must be executed e.g. notice to market, instead of paper based responses – ask the bidders to complete a simple two pager, then hold a dialogue to flush out the rest of the solution.
Think carefully about what is important to the success of the project
The commercial team could have determined what was most important to the project. Pairwise analysis is a great tool to help with this!
The traditional RFP model’s days are numbered and will hopefully soon become a thing of the past. It does not suit all processes and yet it’s still frequently used. If the entire process can’t evolve to be more efficient, then we have to change the way we approach evaluation to ensure we’re selecting the best company for the job, rather than the company that can write the best response.
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COVID-19 is permanently redefining the role of procurement organisations…
Transformational procurement trends that were already underway are now rapidly accelerating due to new working realities. Procurement organisations will be expected to play new roles as companies respond to and recover from this pandemic and its fallout. Organisations will need to actively identify and contain various sources of risks while strengthening their competitive advantage as economies and supply chains recover. Those who learn from the COVID-19 crisis and quickly meet these challenges will forge a competitive advantage.
As corporate leaders’ expectations from Procurement significantly increase—both for the new normal and future challenges—Procurement leaders should deploy six tenets in order to successfully position their organisations:
Become leaders of scenario and contingency planning
Improve real-time visibility into supply chain risk
Develop ability to rapidly deploy cash controls
Increase P&L contribution beyond historical norms
Accelerate digitalisation efforts
Invest in talent
1. Become leaders of scenario and contingency planning
COVID-19 has highlighted that most companies were not prepared to address a catastrophic event and the ensuing economic uncertainty. Going forward, organisations need to assess supply chain vulnerabilities, develop scenario models, and update associated corporate protocols and risk mitigation strategies. Externally, this means developing macroeconomic and supplier-specific assessments of event likelihood and impact and detailed reaction plans to mitigate potential fallout. Internally, it means identifying how policies affecting employees (e.g., travel, remote working model, supplier engagement) need to evolve to promote safety and productivity.
Procurement organisations will be expected to continue playing a key planning and coordination role, ensuring close engagement with other functions to increase the speed and effectiveness of required actions. Leaders should direct their teams to codify the learnings of this crisis, develop scenarios and contingencies, and establish dedicated Centers of Excellence.
2. Improve real-time visibility into supply chain risk
Having real-time visibility into evolving sources of risk is critical for initiating mitigation plans on time. Procurement should deploy permanent control towers to monitor specific risks (e.g., financial, operational, geopolitical) to identify early warning signals and deploy the appropriate responses. This includes re-examining the company’s risk of supply across suppliers, geographies and facilities, and proactively identifying supply alternatives, strategic alliances, and hedging strategies should a catastrophic event impair access to critical inputs.
Additionally, organisations must develop the necessary processes to monitor key suppliers at a detailed level – tracking financial viability, operational capacity, talent management, transportation networks, etc. These metrics can be used to establish a supplier risk score to assist in response prioritisation and supplier segmentation.
3. Develop ability to rapidly deploy cash controls
Having free cash flow is vital in times of crisis. Procurement will need solutions to rapidly slow cash outflow while minimising operational and cultural disruption.
Having hypervisibility into spend allows companies to quickly distinguish between essential and discretionary spend in times of systemic shock. This allows Procurement to deploy the right processes—with senior leadership support—to control all substantial discretionary spending, establishing criteria to allow, deny, or delay expenses. Further, organisations should take a more nuanced approach to payables, adopting different terms based on suppliers’ financial position and criticality.
In parallel, companies should optimise inventory, increasing cross-functional demand planning, portfolio simplification, and material substitution plans. Doing so will allow for better use of current inventory and free cash for other uses while minimising production disruption.
Delivering savings is the core mandate of procurement teams, and many are feeling increased pressure to further deliver to alleviate financial hardships.
Externally, this requires prioritising actions and suppliers based on a keen understanding of market changes (e.g., commodity and labor rates, supply base changes). Procurement also needs to create new sources of leverage using a holistic set of tools, including e-auctions, product teardowns, should cost models, and stronger collaboration with strategic suppliers.
Internally, Procurement is well-positioned to play a critical role in aligning leaders to reset company behaviours, including identifying places where historical consumption patterns have been wasteful. Such moves require organisational trade-offs, so Procurement must identify the least disruptive actions and lay out the costs to enable informed decision making. For most organisations, this requires an unprecedented level of transparency and an ability to influence internal clients and leaders beyond what has been required.
Those that exercise these capabilities—while working closely with leadership, the business, and other functions—will see step changes in savings. By doing so, they will help their companies better absorb shocks and reinvest in corporate priorities.
5. Accelerate digitalisation efforts
Diligent use of technology has supported procurement functions navigating COVID-19. Going forward, many companies will need to accelerate on-going digitalisation efforts and adopt well-established technologies like P2P automation. It also means accelerating the use of more advanced technologies to monitor risk, analyse spend, surface savings opportunities, onboard and manage suppliers, and conduct market events electronically. Having these capabilities in place will ensure procurement teams remain effective and agile in times of crisis – working remotely from peers, clients, and suppliers.
6. Invest in talent
As Procurement takes on more responsibility, roles and required capabilities will evolve. Procurement will be at the forefront of strategic thinking, cross-functional management, and external alliance management. New skills will be required – including management of AI, automation, and data science. Procurement leaders need to rethink their talent management strategies, create new roles, increase training, and ensure adequate talent pools.
Path forward: COVID-19 has redefined the role procurement organizations need to play in times of crisis and recovery. Given the severity of COVID-19, the long recovery ahead, and the potential of other such events reoccurring, the expectations of procurement organizations will remain higher on a permanent basis. Procurement functions face a key decision point in where they go post COVID-19—those that rapidly learn from the experience and pursue a “new normal” will be well-positioned in the long term, achieving outsized returns.
This article was originally published on LinkedIn on 24 April 2020 by Daniel Weise. It has been republished here with permission.
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Spend Analysis can help build a roadmap on category sourcing and capture savings.
I firmly believe that spend analysis is probably the simplest yet smartest exercise a procurement department can conduct. And I’m not talking about leveraging a spend cube technology and running a GL file to get some rapid classification, albeit, that is the first step many of us take. But how about those of us who don’t have a robust spend technology deployed yet? Well, good news is that the value of analyzing spend is not in the complexity of the tool, or the visualizations that it produces, or even how quick they are produced; but it lies in the power of understanding spend patterns and asking the right questions behind those visuals and tables.
For many years my team and myself have conducted spend analysis exercises in MS Excel or Access and things have worked out very well, and we’ve learned a fair share of valuable lessons in terms of both effective spend classification, as well as result interpretation. This last one critical in operationalizing and mobilizing procurement teams. Unquestionably, these lessons when applied together can become a secret weapon to an organization, and even if every company applies them, the “secret” part of it remains true as every spend profile is different to each company as well as the strategies employed to develop a competitive edge. Here are some of the things, I’ve learned from analysis dozens of spend profiles over the years:
Spend Analysis can help build a roadmap on category sourcing and capture savings. This is no secret, as it is the primary reason why anyone would run a spend analysis. The mechanisms by which spend is classified and categorized help organizations understand where money is going, to which vendors, in which regions, on which categories and how diluted or dispersed spend might be across these areas. Accurately classifying spend is the first step in identifying levers across spend categories, where aggregated volumes might drive value or how “quick-and-easy” it might be for the organization to identify and drive savings to the organization.
Spend Analysis is key to identifying tail spend, even more so, in defining it. Which seems to be almost a bi-product of the spend analysis exercise itself. Because Spend Analysis relies in tying suppliers to categories, irrespective of the taxonomy used, thresholds are typically set based on spend levels, which ultimately will put all the “unclassified” spend in one large bucket conventionally (but not conveniently) addressed as “tail”. Let me tell you a secret, Tail Spend is a big problem for a lot of organizations because that’s where a lot of unmanaged, unsupervised spend goes, this is where procurement policies and procedures die and all controls are lost, but inherently, where a lot opportunity resides. Controlling tail spend is a major priority for organization, especially those who have already executed on a sourcing roadmap and deployed (some) category management.
Spend Analysis helps – very accurately – identify procurement behaviors. Remember that tail spend conversation we just had? Well, analyzing tail spend can help us determine when buyers across the organization are buying from suppliers who are part of managed categories but who are not part of the negotiated deals the organization has in place, repeatability of this pattern with the same “unmanaged” vendor may mean the buyer has a preference towards that vendor, for whichever reason (e.g. buying from Lowes where a contract with Grainger exists); conversely, finding many “unmanaged” suppliers under the same category may mean the buyer isn’t aware of the deals that might be in place with a preferred vendor (i.e. buying from Fastenal, Lowes, Amazon, and McMaster Carr instead of simply Grainger), doesn’t know how to follow a process to purchase from that vendor, or more interestingly, the buyer may have a preferred payment mechanism or process to use, which by the way, it typically defaults to the one that’s easiest. A good rule to follow is that the easiest procurement process should also be the right process, needless to say organically decreasing rogue spend.
Spend Analysis enables compliance by driving visibility into all the things above, and helps us start asking ourselves questions about why we see purchasing patterns that should not exist, define how prevalent they are, what regions or departments are reoccurring offenders or even understand how some of those vendors are being paid. I’ve seen a lot of customers who prefer one payment method over others, some like the P-Card approach as they benefit from the rebates, some others prefer limiting their P-Card spend as much as possible in order to drive technology efficiencies into the payment process – think of dynamic discounting and supply chain financing methods, as some of these benefits.
Last but not least, spend analysis is a tool to mitigate risk across supply base and enhance supplier relationship management best practices. Think about it, knowing how much you spend with a certain supplier can tell you how much leverage you really have to negotiate pricing, but it can also tell you how much you rely on a given supplier to enable the continuous operations of your organization. If a stationery supplier goes bankrupt overnight, your business may be able to stomach that. But what happens when a supplier in a more critical category is badly exposed to risk, perhaps a supplier who produces a patented part to your broader supply chain process across the world? Knowing how much the business relies on its extended supplier network, with a high confidence level, is critical in managing inherent risk and adapt quickly when needed.
The value of ongoing and disciplined spend analysis can offer many insights into how the organisation operates. It provides windows into efficiencies and opportunities that may be captured by the business. Moreover, spend analysis is not a “one-and-done” thing, the more frequently it is done, the clearer the trends and patterns become. If you are able to integrate spend analysis into other valuable source-to-pay tools and technologies, the company can really benefit from quick improvements and a sustainable procurement function. Spend analysis can enable a competitive advantage, you may even want to see it as the most exclusive secret weapon at your disposal.
The coronavirus crisis has created a number of challenges for hiring. Here’s how to hire the best people during this difficult time.
It’s a fact that most business leaders already know, but one that this crisis has highlighted more than ever, and that is: your people are your everything. In volatile and stressful situations like the present, the best talent shines through more than ever, and can literally be the difference between companies that make it and those that don’t. This begs the inevitable question: How do I attract and hire great talent?
Back in March when the world was a rather different place, I took part in Procurious’ Big Ideas Summit where I advised procurement leaders how to stay ahead of their competition by hiring better people.
Since that time, the situation has, obviously, completely changed and companies now have additional obstacles to overcome to attract the best talent. Here, I’ll share how my clients are staying ahead of the game right now and in doing so what they have learnt about how to make their recruitment process far more agile, even when we return to ‘normality’.
Here’s how you can follow in their footsteps and hire the best talent right now:
Hiring via video conferencing
Would you hire someone without meeting them?
At the beginning of this crisis I posed this question to a number of our key clients and the answer in 95% of cases was an emphatic ‘no’. However, as the realisation has grown that this situation is not changing any time soon, I have experienced a shift in mindset.
Hiring managers are being forced to reconsider their stance and we are seeing a new approach to hiring, the result of which may have positive long term effects and change our attitude to remote recruitment forever.
One of our financial services clients started a proactive recruitment drive across their Global Procurement function at the beginning of the year. Far from slowing down they have continued to recruit, engage and on-board using video conference technology, taking advantage of the fact there is a pool of highly talented furloughed or disengaged talent in the marketplace.
Being a global player it’s a given that their procurement team needs to be able to engage remotely with stakeholders on a daily basis. Their belief is that by embracing the video conferencing interview process, they are able to clearly assess if a candidate will be able to drive stakeholder engagement using exactly those tools and technology. If a candidate can’t perform remotely at an interview, how then can they influence and engage with key stakeholders around the world remotely?
In addition, their expectation is that we will see an increase in home working practice once we exit lockdown, compared to before COVID19, therefore peer to peer relationships will need to be built through remote interaction.
Speeding up the recruitment process
If one thing is for sure about great talent, it’s that they always have other options. For this reason, you’re likely to lose talent in long and drawn out recruitment processes as someone else will simply beat you to it. In addition to this, your recruitment process says a lot about your company, and if it takes too long, this will make candidates question how efficient and effective the rest of your business is.
When it comes to recruitment processes, the current crisis has presented an interesting opportunity. Usually, senior appointments are drawn out as they often require international travel and the coordination of different people all around the world. Given travel is currently not possible, companies have a unique opportunity to simplify.
One of our manufacturing clients has worked closely with their HR team to redesign their interview process to a single stage panel interview, attended by all stakeholders. Where previously the process may have been drawn out over 3 or 4 stages and weeks and weeks, now the decision for critical hires is made in days as opposed to months.
Whilst the change to process for this client is being driven by exceptional times, they believe that if they can continue to foster this ethos there is no doubt that they will put themselves ahead of their competition when it comes to engaging the best talent in the future.
Should your interview questions change because the process is remote?
On the surface, the crisis has not really changed the fundamental scope of most roles, beyond a heightened need to be able to use technology and communicate digitally. But has it changed how we should assess people? In many ways, it has.
One area remote interviewing has made more complex to assess is the notion of ‘cultural fit.’ It is far more difficult to ascertain natural cultural fit based on chemistry when not meeting someone face to face, therefore we need to be more scientific about what constitutes that ‘fit’. This means going back to basics and assessing key competencies rather than relying on gut feeling
In order to ascertain this, one of our clients, a food retailer,now incorporates a far greater element of questioning around self-awareness and development as part of their remote interviewing process.. For example, ‘What do you like and dislike about procurement’ helps to identify why they are in the profession and the ‘3 key areas for development’ demonstrates their depth of self- awareness.
Hiring better people
Finding talent in non-pandemic times is already a challenge. Add the changes required due to the virus, and things become even more challenging. Yet companies also have so much to learn from this crisis – and those who adapt may learn important lessons that they’ll be able to use to continue to engage top talent well into the future.
Check out Sally Davis’ presentation at Big Ideas Summit London from a few months ago here.
Could the age of influence be drawing to a close? Or does it now reflect the changing attitudes to advertising and promotion in the social media environment?
Cristiano Ronaldo (186 million followers), Ariana Grande (165 million) and Dwayne ‘The Rock’ Johnson (159 million) have gathered some of the largest audiences on Instagram. But a celebrity status and a huge following doesn’t necessarily lead to great influence. The Digital Marketing Institute has shown that there is a greater level of trust placed in an influencer versus a celebrity.
But as an “experiencer”, you may have the most engagement of all!
In the first article of this series I established the context for how the nature of influence is changing the digital age. As people’s consumption of media and social media changes, so does how we perceive people to be ‘influential’ in our lives. Individuals from all walks of life now have a platform to share their thoughts, experiences and daily lives.
However, the paradox in some ways of this situation is that the younger generation have been able to build larger followings, and greater influence, despite having theoretically less to offer and share. While this is not at the expense of the older generations doing the same, Gen X and Baby Boomers are certainly lagging behind in the circles of “must know” social media influencers.
There is still an opportunity for these generations to build their own influence on social media, but potentially against a backdrop of the waning powers of influencers as a whole. Cynicism, controversy, commercialisation and over-saturation have all played a part in the erosion of influencers’ status. Far from being an end, however, this may represent the next evolution of the digital age.
To understand this further, we need to revisit the categorisation of influencers and view this through the lens of a shifting balance of power.
Waning Influence and Diminishing Returns?
Micro influencers (those with an audience of 10,000 people or fewer) are likely to be able to command an audience in their niche, irrespective of the changing environment. Many of this group are seen as ‘Experiencers’, the go-to group for recommendations about products, services and experiences.
It’s in the grouping of the macro influencers, commanding audiences of over 250,000 people and generally found in the world of celebrity, where changes in influence may be felt most keenly. These influencers have traditionally had their seat of power on sites such as Instagram, rather than YouTube or Snapchat.
As I mentioned in my introduction, Cristiano Ronaldo, Ariana Grande and Dwayne ‘The Rock’ Johnson have gathered the three largest audiences on Instagram. There isn’t an out-and-out digital celebrity in the site’s top 10 accounts and certainly no politicians or other, more traditional, influencers.
Research has shown that the influence of social media posts differs depending on whether they were posted by an influencer or a celebrity. This is largely down to the question of engagement versus impact. Celebrities may have huge audiences, but products they promote may only be applicable to a small percentage of them (engagement). And while they can reach this audience, they are unlikely to be able to change consumer behaviours (impact).
Celebrities frequently have their own brands and products to promote, as well as those offered by marketers. All these posts may also be treated with a level of cynicism from the wider audience, part of which can be attributed to the truly eye-watering sums of money being earned for sponsored posts.
Money = Influence? Or Influence = Money?
Sponsored posts, adverts, product promotions. If you have a big enough audience on social media and a big enough personal profile, then you might be approached by a brand to help market their products. This can be quite a lucrative opportunity – even if you aren’t as high profile as Kim Kardashian, who reportedly charges over $250,000 for an Instagram photo.
YouTube: Roughly $2,000 per 100,000 followers (this could go as high as an average of nearly $4,000 with 500k+ followers)
And these sums are still rising – and at a rate of approximately 50 per cent per year since 2017 according to the Wall Street Journal. Which somewhat flies in the face of the question of declining influence and impact. It may also go some way to explain why 75 per cent of children dream of becoming YouTubers and why many people are aiming for a hyphenated job title including the word ‘influencer’, rather than a more traditional career as experienced by previous generations.
This is where we can loop back to our original point of why social media influencers are largely from Gen X. They are the ones who appear on reality TV, who are the new generation of footballers who already have a social media following, who understand how best to leverage their own brand and use social media to their advantage.
Real World Influence
A brief interlude to discuss influence in the real world. This is not to say that Dwayne Johnson and Ariana Grande don’t operate in the real world, but their influence largely comes through on social media. However, as influence doesn’t necessarily need to be linked to selling of products or promotion of brands. It can be linked to real-world events and the increasing stature of an individual.
One such recent example can be seen in New York Democratic Governor, Andrew Cuomo. Before March 2020, Cuomo was little known outside of his state and certainly didn’t have a strong influence outside of the USA. However, Cuomo’s leadership in response to the coronavirus outbreak and how hard New York had been hit by it.
Positive comparisons have been made with the response of other world leaders, including President Trump. Not only has this exponentially increased Cuomo’s influence across the real and digital worlds, but it has raised his profile to an extent that he is being talked about as a future Presidential candidate.
It just goes to show how digital influence could potentially have a huge real-world impact.
Ads and Controversy
It could be argued that many influencers are not sufficiently attuned to the risks associated with their influence, as recent controversies have shown. Fake news, advertising poor or harmful products, not marking posts as ads and marketing goods or services to vulnerable or impressionable audiences (i.e. children) are just some of these.
There are site-specific guidelines or requirements to do with the posting of sponsored content, but even with this content can be misleading. Any sponsored content on Instagram, for example, is required to have ‘#Ad’ at the top of the post, but it is frequently either buried in a flood of hashtags on the post or missing entirely.
There are reports that companies actively dissuade influencers from mentioning that a post is an ad, while many also fail to disclose their paid partnerships with influencers. On the other side, the UK’s Competition and Markets Authority (CMA) has pushed a number of celebrities, including Ellie Goulding, Rita Ora and Alexa Chung, to commit to disclosing payments for sponsored posts on social media.
This is not to tar all influencers with the same brush. Many follow the regulations as they cannot afford the reputational damage, or to pay back monies earned, when being an influencer is their sole source of income. However, from the outside, these influencers would seem to be the exception rather than the norm which further undermines their credibility and impact.
Changing the Game
Could greater regulation assist in this? And could many influencers who already follow the existing regulations benefit from stricter rules? There is always going to be a minority at the very least who seek to circumvent regulations, but these influencers could find themselves squeezed out through a loss of audience and influence for failing to play by the rule.
This could be the next, much needed, evolution in the social media age. It could arrest any decline in influence and potentially remove the idea that being an influencer is not a “real career”. And by doing so, this would open the opportunity for others to become influencers and bridge the generational gap that appears to exist in the current environment.
For procurement, it could mean having a market and audience to increase influence, both as individuals and as a profession. How procurement could leverage this changing environment will be the subject of the third and final article in this series, coming soon on Procurious.
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A review of the key elements in supplier management for manufacturers and how Source-to-Pay procurement technology can support the journey towards supply chain resilience and agility in times of crisis.
As the COVID-19 pandemic disrupts global supply chains, procurement organizations around the world are scrambling to react. There are many supply chain management lessons to learn from the Covid-19 crisis. However, some organizations are better prepared to weather this storm than others. Many of these organizations are already using Source-to-Pay technology and are now realizing more than ever that technology is a “must have” to ensure their supply chain remains resilient and agile throughout a crisis. In this article we’ll review how supplier management capabilities in Source-to-Pay technology can free-up and enable a manufacturer’s direct material procurement team to do what they do best to ensure the supply chain remains resilient and agile: becreativeand strategic.
Supplier Data Quality & Management in Decision Making
It may be the most basic level, but data management may also be the most daunting for some organizations. Supplier Data is at the core of every procurement activity, and it is critical for those dealing with direct materials in manufacturing. Often, what procurement teams end up with are multiple collections of data stored in tiny, disconnected data silos, such as: spreadsheets, MS Access databases, email and even the dreaded manila file folder and sticky note.
Obviously, these methods of capturing and recording data have limitations, and these limitations can hamper decision making in several ways, and ultimately impact the management and resilience of the organizations supply chain. Some of these challenges include limited:
Ability to collaborate, identify opportunities or issues and act
Transparency, or ability to scale data, across an organization
Ability to enrich data sets with other, related data sets.
These challenges in the direct material supply chain pose a real threat, especially in a time of crisis and let’s face it, there is no shortage of events that could jeopardise and/or disrupt a business, potentially impacting their profitability, business continuity, image, and reputation. Often, organizations try to band-aid the data problem, which can cause long term problems and inefficiencies long into the future. This is where Source-to-Pay systems can help – by providing procurement teams with a system that centralizes information and ensures data quality meets a high standard. This in turn enables procurement teams to better evaluate a situation, make decisions and act.
Managing a complex network of direct material suppliers
Manufacturing supply chains are notoriously complex, and this fact has been a common topic of the news media throughout the COVID-19 pandemic. It’s a manufacturing organizations’ procurement team that is on the front lines fighting for the supply chain’s survival. However, procurement teams often lack consistent visibility beyond their tier 1 strategic suppliers for each product line, and this limits a company’s ability to ensure the materials and processes required to produce a product are consistently available.
It’s not uncommon for direct materials procurement teams to capture information on sub-tier 1 suppliers. However, organizing and making sense of this data is so challenging that it is uncommon for all but the most critical product elements in the most mature procurement organizations. This is where Source-to-Pay (S2P) technology can help, by enabling procurement teams to capture important information across the entire supply chain so they can identify potential issues early, initiate collaboration with the necessary parties and take action to support suppliers and mitigate potential issues.
Risk & Performance Management
The evaluation of direct material suppliers is often nuanced and complex depending on the final product, regulatory concerns, and other requirements. However, it is up to the procurement team to find a way to ensure that suppliers:
Are not risky;
Perform well over time;
Meet quality & regulatory requirements;
Maintains the right certifications, and more; and
Meet Corporate Social Responsibility (CSR) expectations.
Empowered with all this information, procurement teams can ensure supply chain continuity and resiliency, and that value is maximized for the company. But it just isn’t possible to achieve the levels of organization and collaboration necessary to collect all the data from suppliers, 3rd party data providers and internal business processes to give buyers a complete picture of each supplier across the supply chain without a serious database and supporting processes. To get started and keep the process more manageable, many companies focus on a smaller subset of key suppliers.
Source-to-Pay technology can help procurement teams establish and organize campaigns to collect & update supplier information and receive real-time supplier risk management updates on important risk factors (e.g. Financial, etc.). Furthermore, these solutions can help procurement collect feedback from stakeholders, track and maintain certifications and more. With this information, procurement can rapidly identify and classify issues and then collaboratively work with suppliers on improvement plans.
One of the benefits that effective supplier development programs have in common is they establish mutually beneficial partnerships between the supplier and buying company. These programs enable bilateral feedback, opportunities for product and service innovation, access to new markets and investment. The key to the success of these strategies begins with communication and transparency, both of which are also essential in times of crisis. Additionally, manufacturers with mature supplier development strategies in place tend to have:
Access to reliable data,
The ability to identify critical suppliers across all tiers of the supply chain,
Capabilities to monitor and manage supplier risk and performance,
The ability to closely collaborate with the supplier, often including commercial, operational and technical strategies and plans.
Accomplishing and maintaining each of these elements over time is often a challenge for all but the most mature procurement organizations, but it is never too soon to lay the foundation. Source-to-Pay technology can help procurement lay the foundation, by fostering communication, collaboration and better visibility across the global supply chain.
Supply Chain Resilience and Agility
Due to the COVID-19 pandemic, the world is now painfully aware that even the best run supply chains can encounter significant challenges. However, some supply chains will recover faster than others because of their resilience and agility. What the best performing supply chains most likely have in common is a procurement organization with a strong data foundation to support effective decision making, the ability to collaborate and communicate with and support all tiers of their supply chain, monitor and track risk and performance and effective supplier management and development strategies that has produced close partnerships.
Throughout each of the elements described in this article, Source-to-Pay technology replaces much of the manual, non-strategic effort necessary to support and manage supplier relationships. The result is a foundation that empowers procurement teams to add more value to the organization and be better prepared to manage their supply chain through times of crisis.
Have you been furloughed during the coronavirus crisis? Many people have. Here’s a searingly honest account of what it feels like.
Matt* was suddenly and unexpectedly furloughed from his job as a sourcing consulting director at one of the US’s most recognisable businesses. He has shared his story here on the condition of anonymity.
Life has a funny way of throwing us curveballs, hey? Just last weekend, I found a list of goals I’d made, sometime after the new year when the enthusiasm of resolutions had yet to wane. I’d included the good old standard goals, something like ‘get fitter,’ ‘scroll less!’ ‘don’t get hung up on things you can’t change!’ but there was also a solid few career ones in there. None of them, I might add, included being sent home from work, suddenly and unexpectedly, with no return date and no certainty there would even be a job to return to. But then again, was a pandemic really in anyone’s plan? I’ve since heard that some people believed it possible, but to be honest I never really gave the idea much thought.
I’m a sourcing consulting director by trade, and I love – or, I loved – everything about my job. Helping clients transition and transform their businesses was my bread and butter, and I enjoyed the variety and challenges it afforded me. On a daily basis, I’d be confronted with new and different projects; no two clients were the same. As a natural people-person, I found the client contact invigorating and the problem solving even more so. I was often jet-setting around the country and seeing different cities while living out of a suitcase and it suited me just fine. It enabled me to get properly embedded in my work and give it my all.
Around January, I remember seeing eerie photos of Wuhan and thinking how strange it looked and seemed. I think I saw a photo of a door welded shut on an apartment block and I reflected on how grateful I was for American freedoms, and how I never thought something even resembling a lockdown could ever happen here. Boy, was I wrong. Our doors might not be welded shut but we sure are trapped in another way.
Have you seen the movie the Lion, the Witch and the Wardrobe? If you haven’t, it’s where four English children go through their wardrobe into a land completely unrecognisable to them, called Narnia. ‘Virus life,’ to me, felt like Narnia, but not in a good sense. When the Covid-19 pandemic hit, it felt like we were safely in the wardrobe one day and then a place we truly didn’t want to be the next.
From a work perspective, when the pandemic did hit hard, I was immediately concerned about the travel side of my job, but not my actual job, interestingly. But as a business, we were shocked at how quickly things exploded and started having an impact. Somehow, stil, I wasn’t worried. But then.
When they told me, I didn’t really react much. I was shocked, I think, maybe a little numb. I’ve always been a risk-averse person, always doing the right thing, always trying to get a stable job and succeed at it. So when I heard I was being furloughed, I kind of got this sense of, but I’ve always done the right thing? I certainly wished it wasn’t me. In a rational sense, I got it, of course I did. I understood the dynamics, I knew that things were unstable now and changing fast. But still.
Since being stood down from my role, time has taken on a strangely elastic sense. Sometimes days go fast, especially when I get really engaged in playing games with my family or staying up late watching a movie. I know some people’s children have driven them crazy, but I’ve honestly enjoyed my family dynamics and our closeness so much. But when I do find a minute to myself, I can’t say my mind is completely clear. My business has told me, ‘as far as they know’ that I’ll be back, but I can’t help but wonder. A few of my colleagues have been laid off and I now see the fear and dread in their eyes as they confront America’s most challenging job market. Sure, in procurement we’re weathering the storm well but nothing is for sure. I try not to think about being fired. Now I’m not ‘present’ at work, I do feel genuinely worried.
Being furloughed has been a great time for personal reflection. Fortunately, I was in a relatively secure financial position prior to this and so far, money hasn’t been a real issue – but I know for so many people, that simply isn’t true. I’ve also paused and reflected on what is an ‘essential versus a ‘non-essential’ business – something I’d never really thought about before. All things being equal, if I was ever offered a job again, I’d definitely preference an ‘essential’ business as having a stable job is critical to me. Despite my relative financial stability, I’ll also be more conservative with cash. You truly never know what is around the corner. That’s what this pandemic has taught me.
In life, I’ve always been used to knowing what’s coming next. It’s such a strange feeling to wake up and not have to plan anything past my morning coffee. But at the same time, it’s nice to take a breath. The future is unclear, but I feel, in procurement at least, that there’s hope.
Are you the office Narcissist? This article seeks to demystify an unloved aspect of the human psyche.
If working from home for 6 weeks has taught me anything it’s that I get a lot out of human connection. I realised that I analyse my own behaviour through interacting with others. They act as a mirror. Now all I see is my own face day in day out on yet another Zoom meeting.
Aside from noticing how bad my under eye circles have become, the Zoom meetings have forced me into a new way of conversing. I try to cut in to get heard over the cacophony of voices all talking and competing at once. This is extrovert torture, where’s my stage?
But I’m special!
But I have a unique view point!
But I’ve tackled this before!
Hmmm is this narcissism? Am I the office narcissist?
The answer is yes, partly.
How we interact with the term narcissism
Narcissism is flung about as an adjective to describe behaviours of people that we encounter in our every day lives. Whether it is hearing about the latest dating flop from your bestie or hearing the latest office drama from colleagues, the pop culture definition would label a narcissist as someone who is self-centered to an unhealthy degree.
Narcissism is commonly defined in the context of Narcissistic Personality Disorder (NPD) which is at the extreme end of the spectrum. Psychology Today defines NPD as someone who displays “…grandiosity, a lack of empathy for other people, and a need for admiration. People with this condition are frequently described as arrogant, self-centered, manipulative, and demanding. They may also have grandiose fantasies and may be convinced that they deserve special treatment.
At the heart of it they lack self-love
While we often view a narcissist as someone that loves themselves too much, talks about themselves a lot and is very self-obsessed. It runs a little bit deeper than that. Robert Greene is one of the most well-known proponents that believes narcissism comes from a lack of self-love that leads to insecurity and a lack of empathy for others.
Without this inner worth the narcissist will seek attention and validation from others to feed the beast.
Newsflash! We’re all narcissists!
What’s often missed in the pop culture definition and understanding of narcissism is that we all have it within us. Narcissism is a normal and healthy part of being human it’s just a matter of where you lie on the spectrum.
Take a light hearted test, go on
In 1979 the Narcissistic Personality Inventory (NPI) was developed by Raskin and Hall.
While this test is not a diagnostic tool, it can be used to see where you rate on the narcissism scale in very general terms. I got 12 out of 40 and rated most highly in exploitativeness, self-sufficiency and authority. I can see how these traits would complement being a leader in a commercial sector!
Are procurement professionals inherently narcissistic?
The most recent edition of the Diagnostic and Statistical Manual of Mental Disorders lists nine criteria for NPD, it specifies that someone only needs to meet five of them to clinically qualify as a narcissist. Read on to see if you can relate to the telltale signs of a procurement narcissist.
Note: it is not a diagnostic tool, instead it measures normal expressions of narcissism. So, even someone who gets the highest possible score on the NPI does not necessarily have Narcissistic Personality Disorder.
9 signs of NPD
Telltale signs of procurement narcissists
1. Grandiose sense of self-importance
The procurement person who must talk at every meeting about themselves and won’t listen to anyone else – even if it’s information from their client that they need to hear.
2. Preoccupation with fantasies of unlimited success, power, brilliance, beauty, or ideal love
The procurement person who won’t roll their sleeves up or get their hands dirty unless the project comes with a highly visible profile.
3. Belief they’re special and unique and can only be understood by, or should associate with, other special or high-status people or institutions
The procurement person who corners your boss any chance they can get and deliberately cuts you out of emails and meetings involving anyone higher up the food chain.
4. Need for excessive admiration
The procurement person who copies the whole team in on an email reply back to a customer where the customer has just thanked them for completing a task.
5. Sense of entitlement
The procurement newbie who demands to be the project lead on a $10m account their first day!
6. Interpersonally exploitative behaviour
The procurement person who proclaims they have written the best category strategy in the history of all time but actually they made others do it for them.
7. Lack of empathy
The procurement person who steals air time in a team meeting to talk about how amazing they are when a colleague has just lost a large account.
8. Envy of others or a belief that others are envious of them
The procurement person who sits in on your project meeting only to then try and take it over (when they were never invited in the first place).
9. Demonstration of arrogant and haughty behaviours or attitudes
The procurement person who refuses to use plain english and will only communicate in unnecessary inflated industry jargon to make it known that they are better than anyone else.
While not all procurement professionals have NPD, we all display narcissistic behaviours from time to time. I would argue that a healthy amount of narcissism is required to be successful in this industry! If narcissism is an inherent trait in everyone that can be harnessed for good, then perhaps we need to reassess the characterisation of the behaviour trait as being only bad.
Is healthy narcissism your untapped office superpower?
4 must-have requirements for your next P2P solution
Finding the best Procure-to-Pay (P2P) solution to meet your organization’s needs and goals is no small feat. The ideal P2P solution will take the entire organization to the next level through improved realized savings, compliance, and operational efficiencies.
So, how do you identify a best-in-class P2P solution? To start, I’ve outlined these must-have characteristics below.
4 must-have requirements for your next P2P solution
1. A single data source.
The best P2P solutions host all information in a single database. A single, searchable data source enables a consumer-like online shopping experience that end users and suppliers will embrace. Having a unified data hub:
Decreases total cost of ownership
Provides one portal where suppliers and vendors can collaborate
Improves user adoption by allowing users to quickly find, compare, and purchase across multiple suppliers in one interface
2. Process and data flow visibility.
Visibility enables procurement teams to strategically source goods and services to expand cost saving efforts. Procurement can use data to negotiate better supplier terms and drive effective purchasing behaviors.
Best-in-class P2P solutions have robust analytics with both automated reporting capabilities and the ability to produce ad hoc reports. Users gain strategic insights into and control over real-time savings, spend by supplier, and spend by region, to name a few. In addition to spend analytics, behavioral data on the most popular items purchased, top search terms being used, and search terms with no resulting products are available within a click of a button.
3. Intelligent workflow capabilities.
A best-in-class P2P solution should allow you to trigger workflows based on user profiles. Intelligent, automated workflows in next-generation P2P solutions minimize time spent on manual processes, and can even make existing automated processes more effective.
Many organizations waste time chasing down invoice discrepancies (missing details, quantities do not match, misalignment with purchase orders). Best-in-class systems automate this process with business rules triggered by missing information. Administrators construct and configure the business rules to reconcile the inconsistency, deny the invoice, send it to an employee with AP permissions, or push it through without changes.
Intelligent workflows do more than automate workflows. Data and insights collected on employee efficiencies can reduce tactical labor and better allocate head count accordingly.
4. Dynamic cloud-based software.
When analyzing a best-in-class P2P solution, it’s important to understand how the software will be implemented into your environment. Why? Because how the software is implemented will directly affect your total cost of ownership.
Break down prospective P2P software into these four categories:
On-premise: Software is a single instance, built on-premise behind the company’s firewall. IT owns the licensed software and codebase, so only they can make configurations and customizations to the software. Most ERPs exist in this manner.
Hosted Cloud (SaaS model): Code is still designed for hosting on-premise, but lives in the cloud. Vendors are responsible for making any changes to the codebase.
Built for the Cloud: This is a self-service software. No code needs to be written to make any changes. The business owns the system, making it easier to maintain.
Living and Breathing Cloud: This type of software has all the benefits of “Built for Cloud,” but also leverages all of the benefits of the cloud provider (such as Amazon Web Services) to expand and contract. This technology is built for maximum performance, extremely fast loading times, and scales to handle maximum traffic on the system.
The technical capabilities of any P2P solution are obviously important, but don’t overlook these questions during the evaluation process:
What do customer references say about this vendor?
Will this vendor help lower total cost of ownership (TCO)?
Will this solution easily integrate with other solutions in the P2P landscape?
How will this vendor support the procurement team and company’s vision?
What is the pricing model and fee structure? Does the model allow for growth?
What is the implementation plan, and what is the support structure for post go-live?
When you’re choosing a Best-in-Class solution for your organization be sure to look for signs of integrity and trust. They may not be on your list of requirements, but you’re choosing a partner for your organization, and when the going gets rough you’ll need an organization you can trust above all.
This article was originally published on LinkedIn on 24 April 2020 by Katie McEwen. It has been republished here with permission.
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Nine in ten of us do NOT want to go back ‘normal’ once lockdown ends. So how do procurement professionals negotiate a new WFH arrangement – that works for them and their employer?
With half the world in lockdown we are starting to get used to the ‘new normal’…. and after an initial reluctance, most of us are embracing the idea of a new way of life.
Yes, we do want some aspects of “normal” life to return. Being able to socialize, see our families, have a decent haircut (that’s not done at home) or enjoy a weekend at the beach.
But we don’t actually want to go back to life as it was.
A recent poll in the UK found that only 9 per cent of Britons want to return to life as “normal” after the end of lockdown.
One area where we are yearning for change is work … or more importantly the ability to work from home and/or more flexibly now that we have put the systems in place, mastered video conferencing and created our own home-office environments.
The good news is that three-quarters believe their manager trusts them to be productive when WFH according to research commissioned by Visier, which provides people-analytics to over 5,000 businesses that employee 7 million staff across 75 countries around the world.
So, if you are one of the 9 in 10 who wants a different type of working life, build on this trust: meet your deadlines, exceed expectations, continue to work collaboratively and show that you can excel at online meetings and conference calls. Do not give your manager any excuses to say WFH does not work – and that you have to return to your place of work, once offices are back open again.
The best way to tackle this negotiation is like any business negotiation (as a procurement professional you already have the skills). So be clear about what you want to achieve, build a compelling case and then make a persuasive argument.
STEP 1: PROVE IT’S THE BEST WAY FORWARD
Seven in ten staff who are working remotely for the first time as a result of the Covid-19 crisis, felt they were either more or equally productive as a result (despite the unique challenges of slow internet speeds, homeschooling and hours queuing to purchase life’s necessities).
So, working from home does work. Just make sure you have the data to support your argument and include this information in your flexible working request. It will make it far harder for your line manager to refuse…and also help you prove to yourself that you CAN do this.
TIP: Make this data easy to assimilate by churning the figures – I wrote five more pitches every week, responded to 15% more enquiries per day, set up an online meeting with a new supplier and negotiated a contract remotely etc… It is much harder to argue with facts.
STEP 2: WHAT DO YOU REALLY WANT?
As with any negotiation, you need to have a clear goal. Perhaps WFH 5 days-a-week will seem too isolating (or impractical), so do you want 3 days in the office, 2 days at home? Or maybe a 9-day fortnight.
Also, if you are likely to fall into the category of being asked to work more flexibly (social distancing is going to last for some time, so you may not actually be welcome in the office), you need to work out what works for you. If you crave the stimulation of an office environment at least part of the week, make sure your employer knows that WFH permanently is a deal breaker… and let’s face it we all find it difficult to be home 24/7 with family rows over internet usage.
TIP: Presenting a simple solution will make it easier for your immediate line manager to make a decision (remember, everyone else will be putting in flexible working requests too). However, you might have to be flexible about being flexible – for example, to agree to WFH on a Wednesday because everyone else is at home on a Friday.
STEP 3: PRESENT A SOLUTION – NOT A PROBLEM
The financial implications of Covid-19 mean that organizations will be looking to shed staff and cut overheads. One of the most obvious cost savings is premises – with predictions that there will be a huge shrinkage in office floor space even after the world gets back to work.
So, highlight the savings on office overheads from sharing space, hotdesking or remote working.
Another way to save money – and potentially save your job – is to offer to work a reduced working week.
Yes, it will mean a pro rata salary (a 20% pay cut if you move to a 4 day-week), however if the coronavirus has taught us one thing, it is to value having less while enjoying more time with those we love.
If you no longer have to afford two holidays a year (it might be difficult if there are travel restrictions for some time to come), are saving a fortune on eating out (more of us are becoming proficient home chefs) and spending less on grooming (who else is embracing a more natural look?), you might be able to take that pay cut.
TIP: Make yourself less expensive – you will then be less expendable. Being cheaper to employ while being more productive will make you less of a target for redundancies than your colleagues.
STEP 4: WHAT DO YOU NEED TO MAKE IT WORK?
There is no point asking to work flexibly if the office can’t get hold of you, conference calls keep cutting out and your presentations no longer look professional.
So, you need the right tools. That includes the right tech (laptop, software, printer and an upgraded internet connection). Also discuss insurance (this might cost more if you have expensive equipment at home), the extra costs of running your home office (electricity) and an allowance for things like stationery, printer ink and other office supplies.
TIP: Don’t make expensive demands (it could be a dealbreaker) but show you have thought through the practicalities of WFH and wish to have an open conversation about how to make the new arrangement work. In some countries you may be able to claim these expenses against tax and in the UK from 6 April 2020 employers have been able to pay up to £6 a week (£26 a month) to cover additional costs if you have to work from home (although not for those who choose to do so).
STEP 5: KNOW THE LAW – JUST IN CASE
While employers are likely to be highly responsive to flexible working requests – or even insist that more staff WFH at least part of the week – it still pays to know the law…and in particular, what reasons your employer can use to refuse your request.
Many workers around the world (Europe, Australia, some parts of the USA) have the right to request flexible working (although this is NOT the same as being able to work in the way you wish – you just have a right to make a request).
Generally the reasons for refusal include:
it is impractical – either you have to be there in person or there will be difficulty reorganizing work among other staff
there will be an impact on performance, productivity, quality, customer service
TIP: It is better to preempt a refusal, by countering it in your flexible working request. It will not only show that you know your rights but also that you have thought of practical solutions to any potential problems.
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