Category Archives: Trending

Procurement Makeovers – Tales from the CIPS UK Conference

We all need a makeover from time to time, and I am sure that we’re all in agreement that procurement’s image (like anyone’s!) can always do with some fine-tuning.

‘Procurement Makeovers’ sounds more like the name of a cheesy TV documentary you would watch on a Sunday afternoon while the roast dinner is bubbling away in the cooker, than what it actually was – the discussion topic for a panel I participated in at the CIPS UK Annual Conference in London last week. 

The panel was hosted by the esteemed CIPS economist, Dr John Glen, from the Cranfield School of Management. My co-panelists were the charming Mr. Miguel Caulliez, Head of Global Procurement, Nokia Networks and Simon Harnett from National Grid.

It was really inspiring to chat with both Simon and Miguel prior to, and during, the panel discussion and learn about their respective procurement change management journeys.

Miguel’s LinkedIn profile reveals an impressive blue-chip pedigree working high-profile organisations all around the world. All this great experience was channeled into some very powerful leadership insights around staying laser-focused on the end-goal.

It was interesting to be reminded of Nokia’s amazing ability to move in and out of businesses and continually transform, adapt and thrive. National Grid’s contract management overhaul reinforced the value of a well-planned and well-executed process for change.

The panel was in violent agreement about some of the fundamentals of a successful change program:

  • Having a vision
  • Communicate, communicate, communicate
  • Getting some quick wins (this wasn’t unanimous).

The two thoughts I would like to share are, that during change you need to make sure people understand the why, and to remember that change is very much a political campaign.

Understanding the Why

The most important element of a change program is for people to understand why they need to change. We get these questions every day – Why should Procurement get involved in social media? Why should we collaborate globally on-line?

  • Procurement needs to be “the smartest guy in the room” – our profession needs to be up to date with the latest news, eLearning and be able to ask questions in a trusted environment
  • Respond to disruptions – an online community provides the profession with a vehicle to create global information streams and collaborate together to respond to crises
  • Adapt Quickly – Jack Welch stated – “If the rate of change on the inside is slower than what it is on the outside, the end is near”. With the Internet of Things upon us, the procurement profession needs to be moving ahead of the technological curve if we are to thrive in the digital economy
  • Promoting the profession – I learned early in my career that, in managing any change, it was important to shine a light on the work that others were doing to progress the cause forward.

If we are going to fight back against the out-dated stereotypes of our profession, we need to individually and collectively do more to “make ourselves famous”. We need to make sure the global business community knows the role that procurement plays.

Interesting stories amplified through social media will get our profession noticed and help you build your influence too.

Don’t just stick to talking about the serious stuff either. Procurement has great stories and content to share, and often the best stories in the organisation – from buying gulf-stream jets in the first week on the job, to buying a plane ticket for a rattlesnake.

Change is a Political Campaign

The second point I would like to make on change is to address that time-old question on whether you need support from the top.

Yes, of course you need support from the top, but, if you are going to be successful, grassroots campaigning is also critical – because you can’t make change without support from the bottom.

Be ready – your biggest dissenters may come from left field and may actually be your peers, or worse, your own team!

Consider the Netflix series, “House of Cards”. The protagonist, Frank Underwood, successfully navigates the halls of power in the Capital, keeps his campaign sponsors happy, all while dealing with powerful external stakeholders, his peers and his own grassroots – his electorate in Gaffney, Georgia.

In managing change, you need to work in all directions, both inside and outside your organisation, to be effective. Don’t underestimate the effort required to win the campaign!

And you need to use the full artillery of communication vehicles to deliver a consistent message, delivered in an interesting package, across every format available.

Transforming Procurement

Procurious is leading a major global procurement transformation. The community spans 125 countries, has 7,500 stakeholders and impacts up to 2.5 million professionals.

The goal is to change the image of procurement. Like many of you, our team is tired of talking about the outdated perceptions of procurement and wants to do something about it.

Our transformation effort here at Procurious aims to take the procurement profession from being a disconnected group of individuals, to a continent-straddling network, comprising the great and the good of the procurement world.

We are using social media (LinkedIn, Facebook, Twitter) as our delivery channel, but at the same time, running social media workshops, meeting individuals and speaking at conferences, in order to champion the benefits of social networking and encourage the ‘uncontactable’ to poke their heads above the parapet and truly become part of the conversation.

The transformation has definitely begun, but we have a long way to go in connecting the entire global procurement community to collaborate online.

So, help us complete the procurement makeover! Join Procurious today and help make the change a reality.

Future Proofing Procurement: Leveraging Innovation in Supply Networks

Eva Wimmers the Former CPO at Deutsche Telekom, is currently in Australia running a series of procurement innovation workshops.

This ground breaking project is being delivered in conjunction with The Faculty and brings together Australia’s top procurement teams, with the goal of unlocking and leveraging the untapped potential that lies within our supply networks.

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In this post, Eva provides some insight into the need for procurement innovation and highlights what she’ll be covering in The Faculty’s Innovation Workshops.

The whole world is digitalising, as all industries are affected by the rapid changes that the Internet and its services are producing for our every day lives. This means that Procurement needs to change and learn how to procure such products and services.

Often these are not only provided by the big established companies, but increasingly by small- and mid-size innovative players – this produces a bunch of new challenges for Procurement teams around the world:

  • How do we find these innovative solutions and companies, as they tend not to just apply for an RFQ with us?
  • How do we protect our companies against the risk that these smaller organisations might bring?
  • How do we lead our teams into this new world?

I am very excited that The Faculty invited me to discuss such topics in a Pop-Up Work Shop with CPOs in Melbourne and Sydney, Australia, that runs under the title of Innovation Procurement.

For the Australians amongst you: today was the Melbourne workshop that was received very well by all participants! But you can still register for the Sydney workshop on October 20th with The Faculty – see you there or follow us on!

Click here to register for Sydney Procurement Innovation Workshop

How Will Technology Transform Procurement Operations?

New research claims Automation and Internet of Things (IoT) will have biggest technological impact on the function.

In its third set of results from its 2015 Global Procurement Study, Xchanging assesses the impact new advances in technology will have on procurement.

Technology Adoption

Savings tracking (77 per cent) and spend analytics (76 per cent) technologies are the most widely implemented, in the context of a tough economic climate where spending cuts and streamlined processes remain top priorities for businesses.

This mirrors respondents’ answers about the KPIs on which their procurement functions are measured – the top four all being cost related (47 per cent cite cost savings realised as their most important KPI, 19 per cent revenue impact, 16 per cent cost savings identified and 14 per cent cost avoidance). 

Over half of companies questioned also already have automation (68 per cent), reporting dashboards (68 per cent), contract management (67 per cent), supplier performance management (64 per cent), market intelligence (60 per cent), eSourcing (59 per cent), predictive analytics (54 per cent) and Internet of Things (54 per cent) technologies in place.

In general, the organisations most likely to have the above solutions in place were:

  • In the U.S.
  • Larger, with 3,000+ employees
  • In retail, consumer goods or manufacturing industries
  • That outsource parts of their procurement operations

U.S. companies are 8 per cent more likely to have all of the listed technologies in place than those in mainland Europe.

Overall, supplier performance management software and predictive analytics are the technology solutions most likely to be implemented in the next two years (both cited by 12 per cent of respondents), whereas 46 per cent claimed they are unlikely to ever implement online auctions.

Technology Impact

Predictive analytics and the Internet of Things (IoT) are expected to be the most revolutionary technologies for supply chain operations, with eight in 10 respondents (80 per cent/79 per cent respectively) stating they will have an impact, and nearly a quarter (23 per cent/24 per cent) expecting them to have a major impact.

A report issued by DHL and Cisco in April this year estimated that by 2020, 50 billion devices will be connected to the internet – an increase of more than 300 per cent from today’s 15 billion – and that IoT will generate $1.9 trillion across the supply chain and logistics operations industry, with warehousing and freight benefitting the most.

Luke Spikes – Xchanging’s Procurement Technology spokesperson, provides the following insights on the research:

On high technology adoption rates:

“When analysing the data, it is key that we consider how ‘technology’ is being interpreted by respondents. It’s surprising that over half of all companies surveyed said they already have the majority of the listed technology solutions.

“A notable 76 per cent reported having spend analytics technology, but we need to question what technology they are actually using. Are they really utilising a solution that analyses all spend data – how much is spent, on what, with whom and by whom – and transforms this data into actionable business intelligence? Or are they simply using Excel spreadsheets?

“It’s also important to note that there is a big difference between having the technologies in place, and using them to their full advantage, to enhance performance and improve the bottom line. There needs to be a drive on education around technology applications for them to deliver real benefits.

On IoT, predictive analytics and future technologies:

“The supply chain landscape is increasingly global, and IoT can enable businesses to track the exact whereabouts and the condition of goods in transit, automatically monitor inventory levels to manage cash flow more efficiently, and remove human error from the process.

“Predictive analytics will drive a far more strategic approach to sourcing – for example, enabling hedging on the price of raw materials to become a daily part of the procurement process – as well as creating further opportunities for automation to increase accuracy and efficiency.

“Procurement leaders ignore technology-driven progress at their peril. If they don’t seize the opportunity, they will quickly fall behind their competitors. The adoption of new technologies – alongside a continued focus on the value and expertise of procurement professionals – will ensure the function remains a strategic, indispensable part of their organisation.”

The study is a major international project that surveyed 830 procurement decision makers across the UK, Europe and North America.

“Because In A Split Second, It’s Gone”: Lessons Learnt From Formula 1


By Gordon Donovan

Can you remember where you were on 1 May 1994? I know I was at home, my parents’ house, and I was sat in the front room watching, the San Marino Grand prix. The reason that I remember, is that this was the day that Ayrton Senna, one of the greatest racing drivers ever, died when he crashed at Tamburello corner. The reason that I start with this is two-fold.

1) Lewis Hamilton has recently equalled Ayrton’s win total and pole position total, and 2) recently I attended a training course called Performance at the Limit; it was delivered by a facilitator called Richard West. Richard has been a senior figure within the Formula One sport for a number of years and the program was about identifying the common traits of high performing teams set in the context of the high performing teams within F1.

It was an excellent program – there were lots of transferable learning points that I wanted to share with you so here goes… (I’ll point you to the books and TV programme at the embedded links below).

Focus on…

Richard described the safety record in F1, specifically with regard to the death of his friend (and one of my favourite drivers) Ayrton Senna. Richard was working with Williams at the time, and if you have seen the film Senna, there are some references to him in it. Flashback a few years previously to the same corner at Monza, and Nelson Piquet crashes and car stops at the same place that Senna fatally crashes. Flash forward a number of years after Piquet and Gerhard Berger crashes and suffers burns as a result of the crash at the same corner.

The point here is that on each occasion, indeed after Senna’s crash also, racing resumed with a focus on performance and going faster, rather than looking at the bigger picture. The big takeaway for me is that too much focus on one area will lead to the ignoring of some critical issues (safety etc.)

With our internal and external relationships, are we guilty of too much focus on a particular area at the expense of something else?

Group v Team

What’s the difference? One of the activities on this training course was called the pit stop challenge. Essentially, the “group” was challenged to change the tyres on a F1 car during a pit stop. We used a real F1 car from 2009 and we were split into teams for each of the wheels. Great learning point here is that whilst you may be quick at your particular activity, it’s the whole team that counts, and what’s the best way to ensure cooperation?


…It reminds me of something I read a while ago;

A group is a gathering of people, each with their own established roles. As companies grow large, practicality dictates that responsibilities must be divided up. But this is the point at which many employees begin to think that their job is just fulfilling their own individual roles. Some even go so far as to think that stepping outside their established roles is wrong. This is not a team. This is group. Indeed, this is a herd of sheep. It will never be successful.

To be a team, each individual in the organization must act beyond their own responsibility and in the furtherance of others. For each individual on a team, every job is a kind of war, every job is a competition. Unless you win, nothing has meaning. To be successful, each member of the organization must cultivate the mindset that they alone hold the fate of the organization in their own hands.

Only a group of people sharing that mindset can be a team.

Hiroshi Mikitani – CEO, Rakuten Inc

So what type of relationship do you want, one where you act as one team, or two groups both vying for the best outcome for themselves?

Change starts with why

During the program we discussed leadership and the need for employees to feel motivated to work for the organisation and to understand why they were being asked to do something. In other words any change must start with why the change. This immediately made me think of Simon Sinek and his remarkable Ted talk that I had recently seen.

Do we communicate well with our team members and our suppliers to demonstrate why we need to change and what the end goal must look like, do we lead effectively (e.g. Inspire others to be high performing, or do we lead efficiently (e.g. inspiring others through objectives and KPIsI)

There is no silver bullet

Richard described visiting Mercedes team garage and he found that there wasn’t one thing that they were doing differently than anyone else, but it was a whole lot of little things just done better. In other words there was no silver bullet. Sometimes we try and focus on doing one thing to make things better. An example of this is development. How many times have we either conducted or been in our reviews with team members and asked about development, then immediately focussed upon training?

What about all the other learning opportunities? At the CIPS Australasia conference, I attended a session where Craig Lardner said that “mistakes are an investment in getting better”, in other words, learn from mistakes, not just yours but others. Do we share lessons learned amongst ourselves.

You may be aware of the 70/20/10 learning principle. Essentially this suggests balancing learning through the following;

  • 70 – Experiential/Experience – learning and developing through day-today tasks, challenges and practice
  • 20 – Social/Exposure – learning and developing with and through others from coaching, exploiting personal networks and other collaborative and co-operative actions
  • 10 – Formal/Education – learning and developing through structured courses and programs

I encourage everyone (managers and team members) to look at this model as a way of developing themselves and their teams. The better outcomes take a little of everything and just do it a little bit better.

I will leave the last words to Senna.

My biggest error? Something that is to happen yet.

Let Me Entertain You (Or Not… Depending On The Party Line)

Customer entertainment, gifts, and freebies are becoming a bigger issue for buyers these days. Increased ‘professionalism’, new company guidelines and a general pressure on how you spend your time is making it harder for this traditional form of relationship building to be effective. Despite this It can still be a very potent force to improve your chances of winning or maintaining business, provided it is used in the right way – and you have thought it through properly.

Having been a sales rep, sales manager, corporate buyer and purchasing director I have seen this problem form both sides of the table. As a rep I have stood in the car park of a customer wondering why on earth marketing think a tankard with our logo on it is going to impress a buyer, and as a buyer I have been helicoptered into a grand-prix (which was nice ). So I have seen the good, the bad, and the just plain naff, of entertaining and gifts. So let’s set the record straight on whether you should entertain, and if so how you can do it to maximum effect.

Across the world it has always been traditional to mark good relations with the giving of gifts. This practice certainly doesn’t appear to have held back the Japanese economy where it is a major force in business. If you don’t think you need gifts or entertainment because ‘our relationship is strong enough’ then just try telling your partner ‘…sorry darling for not giving you any presents or taking you out this year, I think our relationship is strong enough not to need those things – is that OK?’ There is a fundamental misconception over gifts and entertaining. Most people think that they are to do with persuasion, or obligation. If that is your objective then you will fail. The only real objective should be to use them for networking, and even the most ‘bah-humbug’ of buyers can probably see the benefits of that.

Many companies have policies on entertaining. Interestingly most of the big ones have totally different ones for selling and buying. They may well have entertainment days and gifts in the marketing budget, and yet corporate purchasing has a policy of not accepting any gifts or entertainment. The Chartered Institute for Purchasing and Supply (CIPS) is the buying equivalent of the ISMM, and they have a policy. It states that gifts should really be of nominal value, and that entertaining should be managed openly, and not of the type that might be deemed to have had influence on a buying decision. So this still leaves a reasonable scope. There may even be ways around the ‘no gifts’ policy at major companies which we will come back to later. So what makes entertaining both acceptable and effective?

The first rule is line-fish wherever possible. By this I mean that you are meant to be doing something that is attractive to people. Don’t offer them United tickets if they prefer opera, and don’t do a golf day if in reality its just your sales guys who like it. I happened to enjoy my day out at the grand-prix, but when I enquired why exactly they did racing it was because the MD loved it. That really made me feel special. Even if you find your customer has a passion for train spotting, then find a way to get him a day out at Crewe station. The fact that you cant ( indeed would not in any circumstances ) boast about this to your colleagues is irrelevant. Most sales people I met worked on an ‘invite first, ask questions later’ principle, and because of that much of the entertainment these days is ineffective.

The next rule is make it easy to accept. One company I knew had a factory near Verdun – not exactly a romantic location. However to get there from the UK you do have to drive through champagne country. They put on a ‘Quality and Product Development Seminar’ to be held at the factory – mmm, fascinating. There was in fact some real content to this, and at the same time the schedule did call for an overnight stop (both on the way there and on the way back) in the heart of Champagne. They got a good uptake and everyone was (literally) very happy. This probably even got around the ‘no entertaining’ company rules.

If you do have gifts, and your customer is wary of accepting such things, then suggest a charity auction, which even the most hardened would find hard to resist. The process is simple – you give them a load of gifts (NB not ties with the company crest on…) and they then run an auction, or a tombola in-house, with the money going to charity. You get great kudos, they are happy, and a charity makes some money.

If you are able to get some key contacts to come to event then make sure you maximise your time to broaden and deepen your knowledge of your customer. I have been to events where sales guys spend more time networking with their own senior management than the customers. This is great for buyers, it lets them off the hook to go and network with others in your organisation who will probably be less guarded than you after a glass or two of Chablis.

The last key rule is don’t talk business. Entertainment should be just that. Use it to get to know people, understand them, even befriend them. Business should be done later. Not only does it put the customer in an awkward position (they mustn’t be seen to let the event affect their judgment) but also it is rare for these events to pass without someone having a drink. Many have lived to regret deals done after too much wine.

Entertaining and gifts can be great sales tools. They can be great relationship builders. The challenge is to take real care and focus on how you pitch them and how you deliver them. In the same way that a gift to your partner bought at a service station, or an entertainment of two tickets for your own favourite sports team does not hit the mark. As the old adage goes, it’s the thought that counts.

How Can Procurement Increase Health And Happiness?

By delivering social good, procurement has the ability to increase health and happiness.


Procurious has been attending the CIPS Annual Conference in London.

Professor Olinga Ta’eed, Director – The Centre for Citizenship, Enterprise and Governance, who spoke at our own Big Ideas Summit back in April 2015, said that although financial value is still wonderful and still king, we’re more interested in social value. It is essential that procurement (as a function) converts sentiment into financial value.

The Social Value Act was passed in 2012 and allows local and national government to consider the social good offered by bidders during procurement exercises in addition to monetary value.

The Act has been designed to make it easier for charities to win public sector contracts, applies only to procurement exercises worth more than £113,000 if awarded by central government and the NHS and £173,000 if awarded by local councils.

But what do we mean by social value?

“Social value” is a way of thinking about how scarce resources are allocated and used. It involves looking beyond the price of each individual contract and looking at what the collective benefit to a community is when a public body chooses to award a contract. For instance, social value asks the question: ‘If £1 is spent on the delivery of services, can that same £1 be used, to also produce a wider benefit to the community?’

It is now becoming increasingly necessary for social enterprises to report on their social value. Social value should equal happiness – but in order to promote the good you’re going to need happy people, a happy company, and ultimately a happy world. We have to look at ourselves, and how much value we bring to the table as both individuals and as businesses.


Is there a true and fair view of social value?

Olinga points out that there are lots of handcrafted metrics out there, but you need to have a model T Ford. You need a benchmark – the benchmark is critical. It has to matter. You can be doing great things, but you need to be able to articulate it.

Hugh Chamberlain – EMEA CSR Procurement Head, Johnson & Johnson, followed Olinga and explained how his organisation was helping people to live happier lives through the products they bring to market.

Johnson & Johnson has the lofty ambition of ensuring people live longer, healthier, happier lives, it is estimated that around a billion people use its products every day.

Johnson & Johnson’s Credo (a common set of values unifying diverse business) states: “We are responsible to the communities in which we live and work and to the world community as well”.

Hugh wanted to highlight the measurable social impact through procurement Johnson & Johnson was making. For instance it buys the goods and services it needs from organisations that would otherwise struggle to get a foot in the door – and also targets those organisations that employ people who are furthest from the job market.

What you need to know about social enterprises

Social enterprises are businesses that trade for a social and environmental purpose. At the time of writing there are 70,000 social enterprises in the UK, collectively contributing £24 billion to the economy. health and social care, but also in housing.

Social enterprises are growing faster than most SMEs, with more women leading and taking charge.

In-fact research from 2014, showed that that 38 per cent of social enterprises are led by women compared to 19 per cent of SMEs and 3 per cent of FTSE100 companies – and that 91 per cent of all social enterprise boards have at least one female director, compared to 51 per cent elsewhere.

Do you know how much social value can be achieved through buying your organisation’s services? How much emphasis (if any) do you put on delivering social value?

86% of UK Sales & Marketing Teams Say Procurement Hinders Progress

Sales and marketing fails to see importance of negotiating deals with suppliers.

According to new research from eProcurement software company – Wax Digital, sales and marketing is the department least likely to get the best deal from its suppliers, with a massive 86 per cent saying procurement hinders their progress.

The CPO Viewpoint research, surveyed by Redshift, on behalf of Wax Digital, found that over one in three sales & marketing functions place orders and spend budgets with suppliers without any procurement involvement. And only 24 per cent in sales and marketing said that they use formal supplier tender processes managed by procurement, far fewer than other departments such as IT and finance.

The problem seems to be sales and marketing’s negative perception of procurement with only 12 per cent of sales and marketing respondents describing the relationship as ‘very close’ and only a quarter of procurement respondents saying the same.

Sales and marketing appears to view procurement the least favourably, with only 28 per cent regarding it as value adding or critical, compared to 44 per cent of finance having the same view. A significant 86 per cent of sales and marketing describe procurement as hindering progress, and 1 in 5 view it as a ‘necessary evil.’

Dissimilar procurement priorities suggest why the two departments fail to work collaboratively. Procurement sees ‘handling supplier negotiations’ as the top way it can help other departments, but this scored the lowest with sales and marketing – only 4 per cent of them prioritising it.

The two departments also disagree over sales and marketing’s spending priorities. While sales and marketing are focussing on creative communication activities such as advertising, website and branding, procurement prioritises marketing fundamentals such as analytics, data and CRM.

Daniel Ball, director at Wax Digital, said: “Businesses need to bridge this gap between procurement and sales and marketing but it’s often a difficult challenge as the two departments function uniquely. This often places an importance on different areas such as creativity and personal relationships versus best price and supplier risk and compliance, which clearly leads to them clashing and being poles apart.

“Through better communication, sales and marketing could perhaps learn from procurement the importance of negotiating worthwhile deals with suppliers, and how damaging maverick spend with suppliers who are not adequately vetted can be. This could also help procurement better understand what sales and marketing value, hopefully leading to a more balanced set of priorities between the two departments.”

4 Key Strategies for Tackling Today’s Most Prevalent Supply Chain Risks

What is the biggest single risk facing your supply chain? Chances are, it’s impossible to name just one. Global supply chains are inherently complex, making the task of identifying, let alone addressing, marketplace and operational risks akin to aiming at a moving target. If you’re like many of today’s supply chain and procurement professionals, you’re under constant pressure to reduce costs while increasing operational efficiencies—and hard-pressed to effectively balance business needs with risk management efforts.

Survey Reveals Common Challenges

Findings from a supply chain survey conducted by global professional services firm, The Smart Cube, shed light on today’s most formidable supply chain risks. Of the senior-level supply chain and procurement executives surveyed, over two-thirds (69 per cent) consider the financial health of suppliers to be one of their largest risks in the next quarter. Respondents also cited geo-political instability (46 per cent); ethical risks, including environmental, social, and reputational risks (31 per cent); and political risks (38 per cent) as key factors with the potential to adversely affect the integrity of their supply chains.

What’s more, the majority of the executives surveyed also predict that the regulatory environment will have a high impact on their supply chains. And they expect outsourcing to substantially increase, due in part to a lack of internal expertise and resources. These factors, taken together, show that global supply chain management is a collection of many moving parts—and the risk management component is becoming even more critical to survival in the global economy. One cost-cutting decision made to affect just one point in the supply chain can lead to vulnerabilities in your entire system, resulting in unexpected costs or delays that derail the company’s ability to reach business goals. Likewise, the introduction of a new industry regulation could increase your supply chain’s overall volatility if you’re unprepared to manage the aftermath of change and its impact on your processes and supplier relationships.

Forward-Thinking Solutions

Innovative leaders are seeing that the challenges can be transformed into opportunities through the strategic integration of risk management into supply chain management. This makes it more important than ever for you to understand your organisation’s supply chain risk profile and take steps to strengthen and safeguard what makes it resilient and fortify areas in need of attention. Additionally, you need to know how risks (and various points of failure) could impact your organisation on the whole. Based on their recent research and consulting expertise, the Smart Cube recommends the following four key strategies to combat, if not mitigate, risks along your supply chain:

  1. Avoidance

When the risk of operating in a particular market, or with a particular vendor or customer, is extremely high, it might be necessary to take drastic action in order to prevent or sidestep calamities. This might include discontinuing business in certain geographical markets, ceasing relationships with established suppliers or customers, and even dropping operating segments of the organisation.

  1. Control

Here, an organisation tries to take charge of the situation through specific manageable actions, typically to abate short- to medium-term risks such as supply disruptions due to human error. Examples include adjusting inventory and production capacity to better manage product movement and implementing easier-to-audit contractual structures with suppliers.

  1. Cooperation

In this strategy, an organisation tries to mitigate short- to medium-term risks by cooperating with external stakeholders, especially its suppliers. Strategic initiatives may include the preparation of joint business continuity plans and collaborated efforts to improve supply chain visibility. Your goal is to protect your interests and those of your business partners, in the spirit of solidarity.

  1. Flexibility

Building flexibility into your business practices and processes can improve the overall, long-term efficiency of your supply chain. Multi sourcing, for example, may help companies tackle multiple challenges—such as those pertaining to geo-political instability, supplier-related risks and financial risks—in one go. By engaging multiple suppliers to deliver quality, price, and reliability requirements, companies can mitigate risks such as supplier bankruptcy or performance deterioration for strategic categories that are critical to operations.

Committing to Proactive Risk Mitigation

Aside from developing a plan to identify, assess, and monitor the various risks impacting your organisation’s supply chain, putting a plan in place to proactively address them can ensure the health of your bottom-line and provide competitive advantage. Knowing that there are different strategies you can employ to help you manage your supply chain risk factors puts you ahead of the game—and in front of potential failures, rather than behind them. Practicing avoidance, control, cooperation, and flexibility in your risk management plan may not remove the element of uncertainty or eliminate the consequences of unfortunate events, but it can give you peace of mind that you have strategies on deck to protect your supply chain and the business it supports.

Omer Abdullah is The Smart Cube’s Co-founder and Managing Director.

A New DNA for Public Sector Commercial Activity

DNA is the material that identifies a living thing and determines how it looks or functions. But can it ever be altered?

Thanks to the East of England Local Government Association for permission to republish this article. Procurement lead for the East of England Local Government Association Eddie Gibson talks through plans for “a complete reversal of the commercial DNA in the public sector” and looks at ways in which this can be achieved.

When Cambridge biologists Watson and Crick unravelled the double helix structure of DNA in 1953 their research was labelled groundbreaking.

But even though the discovery would go on to shape genetics, forensics and the medical, legal and scientific professions, nobody could have imagined back then how great an impact this tiny molecule would have on our everyday language.

These days successful sports teams have “winning DNA”. Musicians perform because it’s “in their DNA”. Even actors want to get “inside the DNA” of the characters they portray.

In March 2014, when Sally Collier, Chief Executive of Crown Commercial Service (CCS), announced that the new EU Public Contracts Regulations would require “a complete reversal of the commercial DNA in the public sector”, it seemed that Watson and Crick’s great discovery had even wormed its way into the sometimes impenetrable language of public contracting and procurement.

But what did she mean? And could the DNA of anything really be given a makeover?

Shaking up the system

Collier stressed the need to “fundamentally change the shape of the commercial landscape in central government.”

And those who attended the first round of CCS training on the new regulations during Summer 2014 were given a good indication about how this could be achieved.
The session opened with a slide representing the “new DNA”.

It showed a public sector placing far greater effort and resources into pre-tender activities (identifying needs, market research, supplier engagement) and into post-tender activities (contract management, continuous improvement, negotiation), instead of focusing large amounts of attention on the actual process of “The Tender” itself.

What happens next?

The UK Public Sector has been living in the brave, new world of Public Contracts Regulations 2015 (PCR2015) since 1st April 2015.

And critics would say that the profession’s somewhat predictable reaction to PCR2015 has been to obsess about the disruptions to process.

This included the additional requirement to advertise contract opportunities on “Contracts Finder”, the abolition of the Pre-Qualification Questionnaire (PQQ) for procurements below the EU tender threshold and the need to adopt the government standard PQQ for those tenders above threshold not using the Open procedure.

Martin Reeves, the Chief Executive of Coventry City Council and National Procurement Champion for Local Government, told the Society of Procurement Officers National Conference in February 2015 that, although the procurement profession had an excellent reputation for compliance, procurers needed to be innovative, risk-taking, adventurous and even disruptive.

And, with local government procurement spend estimated to be about £57 billion, he argued that the profession should prepare to behave differently in future – a message which backs the DNA changes Collier is striving for.

It also underpins a lot of the thinking stated in the Local Government National Procurement Strategy, published by the LGA in July 2014, the four key strands of which were: Making Savings, Supporting Local Economies, Demonstrating Leadership and Modernising Procurement.

Changing the game

So how do local government procurers need to change and what skills do they need to make best use of?

Well firstly, I think the profession needs to be bolder.

If we can see opportunities or scope for improvement, whether in the specification or contract management stages, then we need to be braver in pursuit of these.
Procurement professionals are often the most commercially qualified officers in a local authority and they need to demonstrate repeatedly where they can add value through the best use of this commercial capability.

Secondly, there needs to be a recognition and maximisation of the use of relevant expertise where it exists.

Too often in the past, the profession has had a reputation for fragmentation and internal disagreement.

With limited and shrinking resources available, there needs to be a collective recognition that focused expertise acting on behalf of the many will give a better result than being isolated and acting independently.

Following on from that, the profession needs to be much more open with each other to promote beneficial sharing and collaboration.

There is still a limited amount of commercial intelligence shared between organisations and we are generally not good at celebrating and sharing our procurement and contracting success stories.

Putting it into practice

The National Advisory Group for Local Government Procurement, convened and run by the LGA, is working hard to tackle some of these issues.

It has been developing national category strategies in key areas of spend, having a “national conversation” at the highest level with some of the key suppliers to local government and through collation and sharing of best practice on the LG procurement web-site –

At a regional level, the East of England LGA supports a network of procurement professionals and brings them together on an annual basis for a Master Class event to showcase some of the best and latest thinking across the procurement community.

This year, we are working with a number of key partners, including Crown Commercial Services, the International Association for Commercial and Contract Management and

All these organisations have something to offer procurement professionals looking to develop their skills.

And what’s more, with their help, we really could see a new DNA for the sector emerge.

Eddie Gibson is a Senior Manager at the East of England LGA and the regional representative on the National Advisory Group for Local Government Procurement.  Get in touch with him at [email protected].

The regional Master Class will take place on 16 October in association with Procurious.

Being At The Table – A CPO’s Tale Of Woe

This article was originally published on LinkedIn. You can find it here.

Some days ago while having a business lunch the topic of “being at the table” arose. It was our client’s fervent hope that as a newly appointed CPO, (a move that presumably underlined the importance of procurement) he one day would sit as a peer at the EXCOM table contributing to the strategy, growth and performance of the business. Well, thinks I, what a wonderful place to consider the notion of being at the table, while being at a luncheon table myself. It got me to thinking of the roles and responsibilities of those at and around the table.

The Options

Of course there are those whose knowledge, experience, and position, earn them a right to 1) be at the table and direct the actions of others, but there are also others at work in this community. There are those who 2) serve the table and whose unique knowledge and skills answer the call for action from those seated. Then, there is 3) the chef whose specialised skills provide the provender for consideration, and lastly there is that which is 4) to be eaten (a role that I vaguely felt myself as having held a few times).

I further reflected on how many times I heard this same refrain from many CPOs whose pre-dominant career objective was to be recognised for contributing to the business at the highest level and ultimately report as a board level peer.   Moreover, I thought back on the many organisations I have come across where the “vital” role of procurement was often tucked way neatly in the CFO shop or Business Services shop where the chance of ever getting a seat at the executive table was remote at best. Given the fact that procurement is now recognised as a key stakeholder in organisational performance, what is holding it back from somehow being fully accepted into the community of senior leaders? While no answer is fully sufficient in a short blog, a couple of themes have emerged over the years in our work with organisations going through their own procurement transformation.

While business knowledge and acumen are the principle differentiators between those around the EXCOM table and those not, there is something more fundamental that is separating the procurement leader from the full approbation of their business colleagues. To put it back in the frame of my table metaphor,

you don’t belong seated if you still sound like a waiter”.

And that is the essential point.

The Prerequisites

Two major things must occur that help propel procurement organisations to the senior level of strategy. Firstly, procurement must lose the connection to purchase orders. I hear some of you shouting “Heresy!”, but what I mean is that the procurement leader has an extraordinary difficulty of representing him/herself as a strategic player when the next topic of conversation is; “What is your order placement efficiency?“ Every effort should be made not to own any portion of the operative procurement cycle.

Secondly and most importantly, is the fact that procurement organisations often make a vital error by creating a separate strategy for themselves that does not altogether align with the strategy of the business. What is more, is that the strategy is often unclear how it contributes to the business in a way that satisfies more than just the finance manager. We often find that procurement leaders speak a different language from that of other senior business leaders. While they speak of category strategies, the business is interested in how real projects bring value to their organisations. While they speak of vendor management and control the business is seeking out how external innovations can help fuel business growth.

The Solution

We advocate two distinct approaches to these dilemmas.

Firstly, develop a strategy that links to the business and directly connects benefits generated to your internal clients. We call these the pillars of successful strategic procurement and the steps are broadly as follows:

  1. Create a procurement strategy directly linked to the company’s goals
  2. Embed the annual procurement cycle into the company business cycle
  3. Drive “Lighthouse” projects directly supporting internal business clients
  4. Pull value through by having the ability to directly influence team actions
  5. Ensure that reporting is visible to your customer and ideally conducted by an organisation other than procurement

Secondly, develop an improved process of understanding the needed innovations required by your ultimate customer and significantly improve the way innovations are sought, collected, evaluated and ultimately adopted from the supplier base. We call this call the Trading Relationship Management process, and Procurement has a natural home at the heart of it.

While there is no guarantee that armed with these dual capabilities, there will be instant recognition of procurement as a future EXCOM member. However what is certain, is that Procurement will begin to demonstrate that it is not just generating business wide savings but can show where and how that value is generated and most importantly how such benefits accrue directly to internal stakeholders. Likewise other business leaders will also recognize procurement’s role as the conduit to supplier enabled innovation. Taken together, these elevate the strategic language of the function.

I explored these ideas with my lunch guest who understood and recognized how important it was for his team to strategically transform, but like so many such discussions it had to be cut short due to pressing issues at the client’s facility (I think he had to go check how many requisitions had been placed that day).