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7 Key Supply Chain Leaders’ Skills and Why You Need Them

What are the essential skills you need to possess or develop if you want to become one of tomorrow’s supply chain leaders? Is it enough to have a business-related degree and a little supply chain experience, or is supply chain leadership a vocation for which you must work hard to acquire specific qualities? Rob O’Byrne from The Logistics Bureau shares his expert advice.


In reality, it’s probably a little bit of both. Indeed, many elements of supply chain leadership can’t effectively be learned through academic channels alone.

In any case, an excellent place to start is by knowing what the most vital supply chain leaders’ skills are and, of course, why you need them.

That’s what you’ll find in this article, so you can check which essential skills you already have, and which ones you might wish to enhance with some pragmatic supply chain education.

These Are the 7 Supply Chain Leaders’ Skills You’ll Really Need

1. Information Technology and Automation Knowledge

Before getting into this first section proper, I want to make one essential point, which I’ll expand on later in this article. Supply chain leadership is all about people using technology as a tool. Nothing is more important than working on your people skills if you want to be a successful supply chain leader.

Nevertheless, few supply chains run successfully today without the support of sophisticated technology tools, like warehouse management and enterprise resource planning (ERP) systems. For that reason, you need at least a modicum of IT understanding to work in a supply chain environment, particularly if you intend holding a leadership position.

To be a supply chain leader, you will need to be familiar with the use of enterprise software applications like WMS, TMS, and ERP, not to mention analytics software, which is increasingly becoming a staple source of leadership decision support.

Enterprise IT Skills at User-level

There was a time when supply chain leaders could rely on subordinate employees to do the hands-on work with business information systems, and be content to receive reports and Excel spreadsheets containing data for decision-making.

Those days are gone, however. Today you’re expected to find your way around the modules of your company’s ERP and business intelligence applications on your own. Furthermore, your need for technology understanding extends beyond hands-on use.

Understand IT as a Buyer

As a supply chain leader, your input into IT procurement will be crucial, and you must know enough about your company’s technology needs to discuss them with vendors. You’ll need to understand the relationship between ERP workflows and physical processes, for instance, to help prevent classic mistakes from being made, such as applying new technology to outdated, inefficient processes.

It will help if you know automation technology, too, since more and more companies are applying automation in distribution centres and warehouses.

Ultimately, strong interpersonal skills still trump technological expertise as a supply chain leader’s forte. However, a career at the head of your company’s supply chain is not one to consider if you don’t have some affinity for technology and its application in business.

2. A Grasp of Economics and Market Dynamics

The supply chain world is changing rapidly and sometimes unpredictably, in line with the market dynamics across many industries, all of which are being affected by rapid shifts in customer and consumer buying-behaviour.

Many markets that used to be purely local or regional have become global, as have the supply chains that serve them. As a supply chain leader, you will need to focus on what lies ahead and, to some extent, predict it. That can only be possible with a thorough understanding of the market dynamics relating to your industry and your company.

Of course, each industry and the niches within them are subject to unique and specific market dynamics. Supply chain leaders can work in any industry as long as they know their stuff, but this does mean that a change of employer can require some in-depth study, especially if the market is unfamiliar.

As a basis to quickly adjust to supply chain career moves, it will help a lot to be familiar with economics’ basic concepts.

To see ahead and lead a supply chain team effectively, you’ll need to understand what drives demand, supply, and pricing for the goods and services provided by your organisation and its competitors. These forces impact a variety of supply chain management elements, including the cost of goods sold and the cost to serve your company’s customers.

3. Understanding Cost-to-serve

Supply chain leaders play a very active role in the profitability of their employing companies. If you’re running a supply chain operation, your decisions impact the costs involved in supplying your organisation’s customers.

You will have a huge advantage and the potential to shine as a leader if you can quantify how your supply chain leadership decisions affect your bottom line. For instance, too few companies focus on the real costs involved with serving customers.

The result of this inattention is often a one-size-fits-all approach to service, inevitably leading to the over-servicing of some customers and the under-servicing of others. A single service offering can even impair profitability, perhaps creating a situation where logistics costs cause some sales to generate losses instead of profits.

If you understand the cost-to-serve concept and can apply it to your company’s supply chain activity, you’ll be able to identify unprofitable customers and products.

By developing a thorough cost-to-serve understanding, you’ll even be able to make decisions that improve the profitability of those customers and products instead of taking knee-jerk measures to cut losses.

Every company wants supply chain leaders who can make direct and positive impacts on the bottom line—but not every company has such leaders. That’s why familiarity with cost-to-serve is one skill that can help you stand out as a competent supply chain professional.

4. The Skill of Flexibility

The one thing you won’t find on this list of supply chain leaders’ “must-have” skills is innovation. You don’t have to be an innovator to be an outstanding supply chain leader, but you do have to support and drive innovation. Flexibility is the skill that will help you to do that.

Flexibility gives you the ability to let others do the innovative thinking. Your flexibility will give those creative thinkers the confidence to present their ideas, since they know that you will adopt them if it makes sense to do so.

Flexibility will keep you from feeling too comfortable in the status quo ever to let it go. Flexibility will ensure that change (often termed the only constant in supply chain management) will not faze you or cause you undue stress. In turn, your team will be encouraged to embrace, rather than resist, change.

Flexibility is one of the soft skills that differentiate successful supply chain leaders. That’s not only because of the changing nature of supply chain operations, but also because things don’t always go to plan—far from it if truth be told.

For example, during supply chain improvement projects, it’s not uncommon for things to crop up, requiring plans to be changed. An inflexible leader may doggedly try to drive through with the original strategy, becoming ever more frustrated in the process and hampering, rather than helping the situation.

Inflexibility often manifests in the belief that changing a plan is an admission of poor planning, but in many cases, that is an erroneous presumption.

Don’t fall into this trap. Work on your flexibility as a leader. Accept that plans should always be work-in-progress, and adapt your approach when required. You can’t plan for every eventuality, and while flexibility is a virtue for supply chain leaders in general, it’s an absolute essential in project management.

5. Project Management Skills

Aside from flexibility, there are many other project-management skills that you’ll need as a supply chain leader. Of course, a lot depends on what leadership role you are in, but if you are headed to the top, you’ll probably hold several management positions on the way up, most of which will see you leading projects from time to time.

If you make it to the C-suite or, indeed, to any senior leadership position, it will help you and your managers do a better job if you understand the fundamental principles, pitfalls, and challenges inherent in project management.

The most crucial project management skills to acquire as a supply chain leader are as follows:

  • The ability to negotiate successfully for resources, budgets, and schedules
  • A high degree of personal organisation
  • A proactive approach to risk management

Of course, the above-noted skills are also valuable for supply chain leaders generally, not just as part of a project-management skill set. I’ve simply noted them here because they are the carry-over skills most likely required in a supply chain leadership role. To elaborate:

  • Personal organisation will be vital for keeping track of numerous projects for which you are likely to be a sponsor and meeting your obligations toward them.
  • You may sometimes be called upon to support project business cases, hence the need for negotiation skills.
  • When deciding if you’ll approve a requested project, knowledge of risk management will help you ask the right questions about the proposal and business case.

6. The Ability to Get the Best from People

So how about those people skills I briefly mentioned earlier?

I can’t put it any more plainly: the ability to lead, manage, influence, and inspire other people is the number one fundamental, essential skill that all supply chain leaders and managers should possess.

It is entirely possible to learn the necessary skills, but a word of caution is due. If you don’t enjoy team building and developing professional relationships with lots—and I do mean lots—of other people, don’t choose a supply chain leadership career.

On the other hand, if you love working with people but just don’t see yourself as a great leader, you probably have exactly the right mindset to succeed in a supply chain leader’s role.

There is nothing wrong with being self-critical, as long as you have the will to learn what you need to learn, and the energy to commit to your personal development. Being passionate about teamwork and enjoying interactions with others is half the battle in succeeding as a supply chain leader.

The 3 Cs of Supply Chain Leadership

Communication: First and foremost, you need to communicate well … to articulate sometimes complex concepts in a way that anyone within your company can understand, regardless of whether they have supply chain knowledge or not.

Dependent on whether your company operates internationally, you might benefit from communication skills that extend beyond your native language. It’s becoming ever more common for enterprises to give preference to bilingual or multilingual leadership candidates.

Collaboration: Secondly, you will need to be able to foster collaboration, a critical element in any modern supply chain.

It won’t always be easy, because sometimes you’ll be asking teams inside and outside of your business to collaborate and work together despite competing priorities and expectations. To ensure these parties collaborate, you’ll need to draw on communication, persuasion, and relationship building skills.

Change: Change management is another people skill in which you might wish to receive some special education or training. If you are planning to graduate from a role where you’ve been used to participating in, but not leading change efforts, experience alone may not be sufficient to help you take people through challenging changes. Resistance to change can be hard to overcome.

The impact of changes within your supply chain can affect employees on a very personal level. You’ll need to know how to empathise and to listen actively to what people are telling you. Without these skills, your leadership can quickly be rejected during periods of change, purely through fear of the unknown and a sense that you don’t appreciate employees’ concerns.

Get the Best From Yourself

Finally, while the need to interact effectively with other people might seem obvious, you shouldn’t neglect the development of the person most impacted by your skills and abilities—yourself.

Supply chain leaders should be able to conduct regular self-assessments and identify their areas of weakness.

We never stop learning and developing, but by having the ability to self-appraise your skills honestly, and work on those areas that need it, you can acquire new expertise at a rate that keeps pace with the ever-changing supply chain environment.

Getting the best from yourself also means having the ability to curb your ego. Learn to recognise when somebody else in your team exceeds your aptitude for a specific task or responsibility.

Let that individual take the lead, and be happy to follow and learn from her. Not only will that free you to play a part in which you can use your strengths, but you’ll also be empowering the other person and helping her to reach outside of her comfort zone.

7. The Know-How to Negotiate

As a modern supply chain leader, it won’t only be your reports and colleagues that you need to interact with effectively and skillfully, but also those outside your organization. Moreover, both internal and external interactions will often involve the need to negotiate.

Supply chain leaders must negotiate often, and even if you’re not doing so on a one-to-one basis, you’ll probably find yourself in scenarios where you’re part of a team of people trying to broker a deal or arrangement.

Negotiation Scenarios for Supply Chain Leaders

Some examples of possible negotiation situations that you might get involved in, and in many cases, lead, include:

  • Procurement of IT services and solutions
  • Contracts for logistics services
  • Brokering deals with product vendors (for direct or indirect supplies)
  • Putting together contracts or service level agreements with customers
  • Negotiations with employee groups or trade unions
  • Business merger/acquisition negotiations

Why do Negotiation Skills Matter?

Negotiations are typically transactional, but often take place between entities or teams engaged in long-term business relationships. Whether you are the lead or a mere participant in the negotiation, your skills will influence the transaction’s outcome and the trajectory of the broader relationship.

It’s easy to make mistakes during negotiations, but with relevant training and education, you can hone your skills to avoid some of the most common errors.

For example, skilled negotiators know that the process does not have winners or losers. They don’t go into a negotiation aiming to win as many concessions as possible, and they don’t feel that they have failed when they have to give ground to arrive at a settlement.

A win/lose type of attitude will lead to negotiating mistakes. Even if you come out of a negotiation feeling that you have won, you might find further down the line that your “win” has done nothing to strengthen what might be a vital partnership.

Mistakes that Skilled Negotiators Avoid

If you have developed your negotiation skills, you will always enter into discussions looking for an outcome that will satisfy both parties. You’ll also be able to avoid other common mistakes such as:

  • Failing to prepare by identifying what the deal-breakers are, which outcomes are essential, which ones are useful to achieve, and which ones don’t matter in any concrete way.
  • Asking only for as much as you expect… It is better to ask for more than you expect.
  • Modifying an offer you have made before getting a response to the original. It’s important to understand that the other party may use silence to bait you into relaxing your conditions.
  • Offering compromises before you have heard all the demands of the other party. By getting all the facts first, you can be selective in identifying where compromise may be possible.
  • Focusing too much on your party’s input and achievements. Strong negotiators pay close attention to the opposite party’s behaviours, ask plenty of questions, and take time to understand and analyse the answers.

How to Boost Your Supply Chain Leader’s Skills

Your business degree and/or hands-on experience in a supply chain role will undoubtedly help you gain and maintain a supply chain leader’s position in your current company—or in a new organisation if you should be planning a move.

However, supply chains have become so complicated that an extensive toolkit of required skills is required if you want to thrive and make a difference as a supply chain leader.

Some of the skills in that toolkit can be difficult to attain without many years of supply chain experience, simply because they are rarely taught outside of the workplace. Your best option might be a program of specialised supply chain and logistics education.

Our Supply Chain Secrets program, for example, was developed and designed by people who work in the industry. It can help you learn about each supply chain area pragmatically, using real-world problem-solving and relatable examples of commonly made mistakes—and methods to avoid them.

If you’ve read this blog post, perhaps you’ve been searching online for ways to enhance your supply chain leader’s skill set. If so, you don’t need to look much further. Join Supply Chain Secrets today, and access the skills you need to be a supply chain leader of tomorrow.

This article was originally published here and is republished here with kind permission.

6 Ways To Keep Supply Chain On The Executive Agenda

Supply chain is firmly on the executive agenda (at last!). But how can we keep our seat at the table? Procurious talks to Kearney partner Kate Hart about the burning issues in supply chain – from attracting new talent to co-creating with suppliers.


Supply chain is firmly on the executive agenda (at last!). But how can we keep our seat at the table? 

Procurious Founder Tania Seary recently sat down with Kate Hart, Partner at consulting firm Kearney, to talk about the state of supply chain and what’s coming.



Change, pivot, attract

Supply chain management is increasingly about dealing with disruption, says Kate.

“Recent events have highlighted how susceptible our global supply chains are to disruption, from the pandemic to ransomware attacks to global trade wars,” Kate explains.

So how do we cope? It all comes down to two critical capabilities.

The first is the ability to sense the changing environment and pivot. And the second is the ability to attract and retain core talent. 

That need hasn’t changed for a decade, says Kate. So why is it worth mentioning now? 

“What it means today is very different to what it meant 10 years ago in regards to the importance of being able to sense a change environment and pivot,” Kate says.

That’s because the demands on supply chain professionals have changed dramatically – and certain industries adapt quicker than others.

“Some global geographies are a lot more mature than others so far as their uptake of e-commerce and some geographies have really been lagging,” Kate says. 

Why technology means survival

If retailers were hesitant to adopt new technology, they have an extra incentive now. It’s their key to survival.  

“Amazon has been a trigger for some of those geographies to uptake, but obviously the pandemic has just increased the proliferation of retailers offering e-commerce platforms,” says Kate.

Companies are also becoming more innovative in the way they handle the actual distribution of their supply chains, particularly in the business-to-consumer route.  

“We’ve seen a proliferation of sort of rideshare ‘uberisation’ of that last mile,” Kate says.

“What we’re seeing is those companies that invested in the technology and got ahead of the game really have thrived during this. Now it’s going to be a matter of, you know, catch up or who survives, so it’s going to be quite interesting.”

Understanding the risk

So what are smart companies doing now to avoid future disruption? Supply chain network mapping.

Kate has seen a huge influx of companies not just looking at supplier risk, but looking at suppliers’ suppliers risk and building that information through their supply chains.

Interestingly, this is largely driven by senior executive interest. Never before has supply chain resilience enjoyed such a prominent position on the c-suite agenda.

“It’s beyond just enterprise risk. There is reputational risk, there is financial risk, there are lots of different risks that are inherent in the supply chain and that is very much front and centre in many of our board conversations at the moment,” Kate says.

“The key question that we’re getting asked by boards is how they get visibility in their end-to-end supply chain risk and how they manage that resilience.”

Making it automatic

Companies are also investing more heavily in automation to improve resilience.

‘It’s been quite extraordinary. Some global areas, particularly in the US and in the UK, are seeing a lot of advantage from automation,” Kate says.

“But the investment in automation needs to be deliberate, with a very sound business case, otherwise organisations are investing but not necessarily seeing returns in some areas.”

Technology, like automation, is providing supply chain teams with new levels of influence, Kate says. 

“We’re seeing supply chain organisations use digital tools to create a triage process with a front door to supply chain – a self-service functionality,” Kate explains.

“[It] enables their internal talent team to then work with their business stakeholders to drive extraordinary value.

“So, supply chain is really being impacted positively by digitisation and automation. It’s all part of a focus on resilience which elevates the conversations and, in turn, the value that supply chain can deliver.”

Working as partners

That’s why Kate says the future will be all about human decisions facilitated by technology.

“What does that mean for partnerships across your supply chain?” Kate asks. “It means that the problems that need to be solved are increasingly complex. It requires a very strategic view of your supplier base.”

The strategic view increasingly means changing the relationship to a close partnership.

“In some of the scenarios that we’re working on at the moment, the clients don’t know what the solution is and actually need to engage the suppliers to co-create solutions for problems that are new to both of them,” Kate says. 

That means seeing suppliers as extensions of your own organisation, which is positive.

But as Kate points out, companies still need to maintain “control and visibility so you are not anchored to them in perpetuity. So getting that balance of control versus collaboration right is going to be really, really important.”

The right people

As Kate puts it, the bright future of procurement isn’t possible without the right people.

“All of that is very contingent on the ability to attract, retain, and grow talent – the conundrum of supply chain management for aeons,” Kate says.

“But never is it more important than now. For supply chain management to have a seat at the table it needs to be attracting the core talent that we’re seeing coming out of the universities.

“There needs to be a very strong talent pool that’s feeding into the industry.”

Kate Hart – Partner at consulting firm Kearney, overseeing the supply chain practise within Asia Pacific – can be heard in the webcast series The Future Of Supply Chain Now.

Supply chains are changing. Here are 5 things we know now.

Improve Resilience By Treating Suppliers As Individuals, Says Top Risk Expert

We can’t just get our own house in order. We need to help our suppliers’ suppliers if we want a truly resilient supply chain. Procurious gets expert advice from riskmethods’ Bill DeMartino


How can companies of any size manage the huge number of risks in any supply chain?

Procurious Founder Tania Seary recently sat down with Bill DeMartino, Managing Director of North America at riskmethods, to find out about risk and the future of procurement.

Become resilient or lose credibility

The word of the moment is definitely resilience. But where do you start?

Bill says it’s a process. Not long ago, most organisations were hunting for better information to react faster as threats emerged.

“So this is what I would really categorise as being reactive,” Bill explains. “We want to get better at reacting to events (which is a fantastic place to start by the way) and what I would think of as the journey to resilience.”

The pandemic obviously changed many companies’ perceptions of their own resilience.

Yet he points to data that we’ve seen a 300% increase in disruptions of all kinds over the past three years.

“That means that for organisations who weren’t before acting the mandate is clear; this is the responsibility of supply chain leaders,” says Bill.

“If they are unable to deliver on this responsibility, they’re going to be losing credibility within the organisation.”

The good news is senior management is recognising the importance of proactive supply chain risk management, which will likely lead to more funding.

Treat suppliers better

So we’re all after resilience. But what does that actually look like?

It starts with a shift in the way companies treat and manage suppliers, Bill explains.

“I think we’re on the precipice of moving into what I would call the era of collaboration,” Bill says. 

“Traditionally, we’ve seen working with most of our suppliers in kind of a generic manner and we treat a few of them very specially. 

“But I think that collaboration needs to extend to a broader set of enterprises and so that continuum will continue to be a major transformation element.”

From reactive to transformative

Changing the way we see supplier relationships is a good step, but it’s only the start. 

Once an organisation can react quickly and be more resilient, it’s time to transform. That’s why the most mature and forward-looking organisations are overhauling their processes right now.

“Transformation is not just enough for me to figure out how to be reactive, but I really need to think more proactively on how I can change the elements and the way that I think about the category,” says Bill. 

These advanced organisations are asking how well they understand category risk exposure. And how they can incentivise people to act on the risks they uncover.  

“So it’s really more of a holistic approach to risk resilience,” says Bill.

Automation frees up resources

The other hot topic is automation. Bill says it’s incredible how much of our supply chain can be automated. 

“Supply chain folks are just automating everything that they can and it’s crazy,” says Bill.

“We’re trying to automate all the AP functions, we’re trying to automate all the contract functions, and now we’re actually moving up into the next level and trying to automate the analysis in the diagnosis of the data and the information and insights in those systems.”

“[W]ith this automation we’re able to free up the scarce resources and get our folks to focus on some of the proactive resilience and collaboration efforts they really need for the organisation to thrive,” says Bill.

Risk management in today’s environment

What does great risk management look like today? 

Bill narrows it down to three priorities:

1) Change jobs descriptions and incentives. You need to think about culture change. 

2) Put in place technology that can standardise processes, then measure them.

3) Manage your people well. Ensure that staff are actually following those processes in the way you expect.

“That’s the shift in the maturation that we’re seeing from our customers.  Before, they would just get the information.  Now they are working out how to best utilise that information and become proactive in their risk approach,” says Bill.

Minimise risk, no matter company size

You might be thinking, “That’s all well and good, but I work for an SME. How does that work for a smaller company like mine?”

And it’s true. You may not have the resources or capability at the moment with everything going on, says Bill.

“A lot of smaller organisations are so busy just keeping the business going, no one is taking the time to take a look back and actually think about what it’s going to be in three to five years out,” says Bill.

“They’re  just worrying about survival today.” 

Even if your organisation is small, you’ll likely notice a rising interest in risk management – whether it’s from your customers and executive team. 

“Customers are asking them, potentially assessing them and looking to measure them in terms of their risk preparedness so that’s definitely helping [put risk management on the agenda],” Bill says.

“We are also starting to see a really strong sense of awakening from [senior leaders] and with the idea of a supply network.

“[They’re] thinking it’s not just enough for me to take care of my house, but I need my suppliers to also do the same for theirs.”

What can you do?

So whether risk management is at the top of your agenda already, or it’s just starting to gain importance, Bill suggests three key areas to get your house in order.

1) Using technology to manage risk: “There is an enormous amount of information that’s out there and the largest challenge that organisations have is how to filter through that information and uncover specific and relevant insights.” 

2) Make risk information visible: Can people in your organisation easily find information about risk? 

“We’ve seen a lot of folks who create risk scorecards or risk audits, and that information gets locked away somewhere,” says Bill. 

Instead, he suggests putting that information on your employees’ phones and laptops so they can easily access it when they’re talking to suppliers.

3) Integrate: The final step is to embed all of that risk information and data into other company systems.

As a supply chain professional, Bill says you should ask, “How can I integrate the technology and make it something that really impacts the way that we work?”

Going forward

Now that risk management is firmly on the agenda, you can use it to get ahead in your career. 

Bill predicts the most valuable procurement professionals in the future will be able to manage risk in two ways.

The first is artificial intelligence. Companies will need people who can use AI to spot patterns in suppliers to predict future events. 

“For example, if a supplier shutters a plant and fires the CFO, I could predict a bankruptcy is coming and reorganise my supplier geography to avoid disruption,” says Bill. 

“We can utilise artificial intelligence techniques to start doing pattern recognition and help folks better predict – never with 100% accuracy – but better predict what may be coming down the pipe for them.”

The second is to make suggestions on the best way to react if a threat actually comes to fruition. 

“There’s a number of different approaches that we’ve seen utilised to respond to an event, so we can bring all that information together and present to the individual in a way that allows them to very quickly assess their options, make decisions, and run.”

Bill DeMartino, Managing Director of North America for riskmethods, can be heard in the webcast series The Future Of Supply Chain Now.

How can you limit supply chain disruption and proactively plan for market shifts? Check out this IBM report to find out.

Procurement Needs Less Processes – As They Are Slow, Boring And Self-Centered

Perhaps the best way to get things done is, ironically, to abandon the myriad processes we established to get things done!

I’ve discussed with a number of CPOs during the last months on how they have managed procurement during COVID-19. One recurring answer is along the lines of “we broke all of our processes and went to wild-west-mode.” Now, many say this with an interesting combination of sadness and pride. Sadness that they had to give away the great processes perceived to be the basis for any professional procurement organization. Pride and excitement of how procurement teams were able to improvise, work hard, and survive.

There shouldn’t be sadness for the breakdown of processes. This period has shown that processes are slow, boring and self-centered – and that we can live and thrive with much less of them. Many processes are manifestations of control-freak, risk-averse mediocre management but I admit there are cases where they can be beneficial.

Occasionally processes are great – when they allow for (almost) complete automation. For example, it’s great when routine tasks are mapped out as a process and automated to save people’s time and attention. Even in this case I see process more as a tool to enable (software based) automation rather than as the end-game.

Sometimes, processes can be helpful guidelines for a less experienced employee, and/or to facilitate coordination in teams. If you’re doing a supplier risk evaluation for the first time (and if it needs to be manually done), it may be good to have a process description to guide through the first steps. In these cases, processes should be seen as a learning method. Having consistent vocabulary and descriptions of a process helps communication and coordination across individuals.

Those are the exceptions. In most cases processes bring many hidden costs to our businesses.

Why procurement needs less processes

Processes are, almost by definition, designed to cover all sets of actions taken. This tends to lead to complex multi-step processes that often include a number of bottlenecks in the form of approvals and reviews. Whenever something bad happens in a company, management often asks “how we can prevent this from happening again.” The answer commonly is “let’s create a process.” Over time, there are more and more complex processes in place, gradually suffocating the organization and its creativity.

All this put together brings on a number of problems with processes:

  • Things get slow – there are so many steps to cover and so many approvals that getting even a simple task done takes a lot of calendar time. I believe this is the reason that lot of processes were broken during COVID-19: they were just way too slow to create a meaningful result.
  • Things get boring both for managers and the people driving the processes forward. CPOs often talk of a talent shortage in procurement. How to fix this? Definitely not by trying to reduce our exciting work to a process-led obstacle course. Nobody ever said “I just completed a 15-step sourcing process and that was the greatest moment of my life.” People don’t get excited about running processes but, unfortunately, they may get overly excited designing them. People get motivated about purpose, outcome, creativity and freedom, but not about executing processes. If we provide processes as tight guidelines on how to do things, we don’t get talent. Once we get real talent, we definitely can’t keep them with strict processes. It’s equally bad for managers – their job becomes one of reviewing and approving. Approving POs, business cases, vacation requests, what not. The brightest people who have worked hard, learned a lot, and would have a lot to give become rubber stampers.
  • Processes are also very self-centered. They assume that we can dictate the timeline – it may make our own lives more plannable, but it also takes out any options to leverage the opportunities that are coming up. Say, for example, you follow a strict quarterly business review cycle with suppliers. If supplier collaboration happens only through process-driven reviews, you are not leveraging opportunities coming up in between.

The world is getting faster and more volatile. In this new world, as the COVID-19 era has proven, processes are just too slow. I truly hope that COVID-19 did not only teach us that remote work is possible, but also that a more action-oriented, exciting procurement world is possible … But more on that on my next blog article.

This article was originally published here – it has been republished on Procurious with kind permission.

Navigate Global Trade in 2020 and Beyond

Digitisation, automation, and the shifting state of global trade are the three macro-trends predicted to affect Procurement and Finance the most over the next few years.

global trade

According to ourworldindata.org, global exports today are 40 times larger than 100 years ago. Much of this due to long-term relentless focus on developing free trade – across the world, but especially between the three powerful nations or nation groups: The European Union (EU), The United States of America, and China.

Albeit with the global commerce climate changing daily, there are growing concerns, as highlighted by a recent report from the Economist Intelligence Unit (EIU) that explores why geopolitical issues are dominating.

Free trade is the heart of modern business

The free market has thrived for decades. So much so that the young generation of business professionals haven’t experienced the closed alternative. But due to shifting trade dynamics, the free market we have grown accustomed to may be threatened, and not everyone is prepared.

According to the survey report from the EIU, only 35 per cent of respondents are confident in their organisation’s ability to adapt to global trade trends and have secured alternative market sources or suppliers.

Anyone in Procurement and Finance would agree that a free market and mutually advantageous regulations have made business easier. Cross-border shipping, VAT handling, cross-border invoicing—all of which are more straightforward when governments cooperate with one another. All that mundane work and those non-productive tasks required to move money, people, and goods between countries is decreasing.

As a result, businesses can:

  • source materials where they are the most accessible,
  • produce goods and services where it’s most economical,
  • and sell final products in the markets where the profit can be maximised.

An European Strategy and Policy Analysis System (ESPAS) report has estimated that by 2030, the amount of trade between USA and China will grow by 80 per cent, and over 85 per cent between EU and China.

Given these numbers, free trade must surely be part of the recipe for growth. Or will it?

EIU highlights global trade concerns

In the recent EIU report sponsored by Basware, we interviewed over 400 supply chain and finance professionals to find out how they’re preparing for the future.

Almost one in four of the respondents believe that the post-Brexit climate of trade will have the greatest effect on global commerce. 21 per cent believe that the impending US-China trade war will pack the biggest punch to global trade dynamics.

Overall, survey respondents revealed that they’re generally quite concerned. The most common impacts expected from these changes are:

  • An increase in procurement costs (35 per cent);
  • Greater supply-chain complexity (29 per cent); and
  • A decrease in business opportunities (22 per cent).
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And these professionals are justified in their worries.

Questions regarding international trade post-Brexit and the customs introduced between the USA and its trading counterparts make even the most experienced supply chain experts raise questions.

Discussions of the current and future geopolitical landscape have become a permanent agenda point in board meetings. The competitive nature of businesses is no longer merely determined by the typical factors of economies of scale, product differentiation, switching costs, or access to distribution channels. Instead, it’s also determined by businesses’ abilities to manage ever-increasingly fragmented supply chain for goods and services and respond to changes outside of their control.

According to Ernst & Young Global Limited (EY), one in five executives say that there is “too much uncertainty” to predict the full effects of the trade actions instated this year by the US government.

As products and services become more and more dependent on tangled interdependencies of businesses and therefore subject to trade restrictions, the chances of non-compliance increase. As the probability that these sanctions hit your supply chain increase, so does your business risk.

Steps to prep for the future of trade

How can procurement and finance professionals embrace change to make sure that they are a part of the solution and not the problem?

Participants in the EIU report state that reviewing internal controls and procedures, forecasting costs through simulations, and developing end-to-end supply chain visibility measures are all ways they are prepping.

Here are three steps you can follow, to future-proof your organisation’s global trade strategy:

1. Move to digital flow of information

Move away from paper and email-based orders and invoices and adopt electronic commerce to take advantage of digital financial supply chain and its economies.

2. Consolidate financial and supply chain information to identify risks

Combine information regarding your supply chain from different sources to learn more about your supply chain. Develop alternative sourcing options to diversify supply chain risk.

3. Automate where possible

Automation is required in order to move people around from transactional duties into business advisory and forecasting. Develop and train staff to adapt to change.

It may seem like a lot of work. But, it’s worth it. In fact, many companies may not be able to face the consequences of not doing it. In 2014, The US Department of Justice fined more than $1.5 billion in violations of US rules and regulations collectively.

But in 2019, just a single sanction for a non-compliant company exceeded $1.1 billion. Businesses must apply increased internal controls and procedures to continuously monitor their compliance and the compliance of their supply chains.

Make a plan for your team

Following the three steps (digitising, consolidating, and automating) are three overarching concepts that will future-proof your organisation amidst global change. But there’s more to it and it’s covered in depth in the EIU report, ‘What’s now and next for finance and procurement‘.

Learn more about automation, digitisation and the future of the global trade, and download the EIU report, sponsored by Basware, now. Learn how finance and procurement executives are preparing their organisations – and get additional tips on how you can do the same.

Questions? Contact Basware – we’re here to help you simplify your operations and spend smarter.

Traditional vs Automated Procurement Process

Got major procurement issues in your organisation? You may well be able to use technology and automated procurement to solve them.

Photo by rawpixel.com from Pexels

The procurement process is much more complex than it looks. The more complex it is, the higher the number of issues. An automated procurement process can help you prevent and resolve these issues. However, many companies still rely on a manual process. 

Let’s understand the challenges of the traditional procurement process and the ways automation can help.

Challenges of Traditional Procurement Process

A company practicing traditional procurement process faces a lot of challenges. Here are some of the major challenges of a traditional approach:

1. It’s Time Consuming

A traditional procurement process consumes a lot of time of both vendors and companies. As a result, it slows down the entire process and affects productivity. In addition to this, it can take days to communicate a single message and get the job done.

2. Chances of Duplication and Fraud

In a traditional procurement process, everything happens on paper so it becomes difficult for your team to keep track of everything. That’s why there’s little to no transparency in the dealings. This can lead to malpractice such as duplication of contracts or fraud. A single incident of fraud can affect your company’s reputation. 

3. Inefficient Data Management

An offline procurement process involves a lot of paperwork, so data management becomes challenging. In addition to that, it also increases the risk of errors. In spite of this, 54% of companies are still using a paper-based invoice process. 

Paper-based records are always vulnerable to tampering or loss of information and data. This can put your company in a troublesome position.

Benefits of Using Automated Procurement Process

Here are some important benefits of using an automated procurement process: 

1. Improves Efficiency and Speed of Procurement Process

By automating your procurement process, you can not only speed up the process but also increase efficiency. This helps your procurement team by saving a lot of their time for other important tasks.  

With an automated process, you can automate all the repetitive tasks. This helps you cut down on the amount of manual work for your team. It allows them to handle much more important and complex tasks. 

2. Creates a Centralised System

As mentioned above, a traditional procurement process can lead to duplication and fraud in contracts. For any company, there’s nothing scarier than this.

However, automation can help you minimize instances of duplication and fraud. It helps you create a centralized system for all of your data and documents. This allows your procurement team to easily track down the required documents.

3. Reduce Manual Errors

Unlike a traditional approach, automation eliminates paper-based documentation and decreases the risk of errors. When you follow a traditional approach, it not only consumes a lot of time but also invites risk.

So, it’s best to automate your procurement process and encourage a paperless process to reduce manual errors. It also allows you to store information and data easily and safely.

Do you want to learn more about issues in the procurement process and how automation can help you fix them? If so, check out this infographic from PurchaseControl.

Major Procurement Issues & How to Fix Them with Technology

Image courtesy: PurchaseControl

Are you Effectively Mitigating your Automation Risk?

Procurement’s new direction comes complete with a number of new risks to consider. And automation accounts for a few of them.

Photo by Alex Knight on Unsplash

For several years now we’ve heard the same message – procurement is going to become more strategically focused in organisations. One of the key enablers cited in this change is technology and the increasing automation of transactional tasks to help free up time and resources.

But technology and automation bring their own challenges, not least the impact of dealing with the ever-increasing issue of cybercrime and third-party risk. And, as I’ve said before, despite knowing about it, few CPOs if any have a full grasp of the risk present throughout their supply chain.

It’s not just technological advancements that represent a key risk, but also the role of technology in the changing nature of work. Being educated and aware of these risk factors will help put mitigation strategies in place. But it will come down to how well risks are managed when it comes to understanding the impact of any future major risk events.

I’ve selected three areas linked to technology and automation that procurement must be mindful of as they take their new strategic direction.

Third Party Risk Management & Personnel

Technology has helped to drive and support the rise of the gig economy. A 2018 report estimated that over one-third of US workers (36 per cent; 57 million people) were part of it. It may have started smaller, but the gig economy has grown beyond the names traditionally associated with it, the like of Uber, Lyft, Deliveroo and Freelancer.com.

The attractiveness of the gig economy lies in greater flexibility on where, when and how people work. For organisations it means they don’t have pay all the costs associated with a full-time worker – potentially saving 50 per cent on rates by using a gig worker. This would even hold true in spite of recent legislation passed in the EU and in California regarding workers’ basic rights.

However, organisations may not realise that they are exponentially increasing their third-party, technology-associated risk. An estimated 90 per cent of hacks targeting organisations take place through an individual employee’s computer.

How can they be sure that the laptop or internet-capable device the worker is using is compliant with network security? Or free from viruses or malware? It’s not only the gig workers, but the employees too, with 87 per cent admitting that they use their own devices for work purposes.

How will organisations support the gig economy workers to carry out their tasks while managing their risk levels? It’s a question no-one has really answered yet.

Changing Skill Sets for Sourcing Professionals

An increasing level of automation in procurement will naturally change the skill set that sourcing professionals require to do their job. This will be seen in a move away from data and analytical skills, and an increasing focus on Emotional Intelligence (EQ) and soft skills like change management, negotiation, selling, presenting.

The question is what are organisations going to do with displaced employees? Do they have an ethical responsibility to retrain them, retain them or up-skill them to allow them to move on? Yes, EQ and soft skills can be trained and will come more naturally to some people. However, there will still be a number who have difficulty in moving into this new way of working.

In my opinion the key skill, even accounting for EQ, will be adaptability. With the speed of technological advancement we are now seeing, people have to be far more adaptable than they ever used to be.

It’s impossible to fight change – some people embrace change, others fight it, others are paralysed by it. People will struggle if they don’t have that adaptability as a natural barometer. It’s a much tougher skill set to train, but as technology continues to advance, it’s a risk that organisations need to be aware of.

Responsible Automation

Linked to this is the final risk factor I’ve chosen to highlight here – responsible automation.

Most automation is pretty obvious, for example, installing an ordering kiosk instead of a human for ordering fast food, or having self-service checkouts at the grocery store. What people don’t see is the impact on the low to mid-level managers, who lose much of their transactional and managerial work as a result.

They are at risk as much as the frontline employees, but this isn’t always considered. Organisations have the social responsibility to have intelligent automation, to consider this through the risk management lens and assess how their technology fits with the social agenda.

Being more socially responsible with automation will represent a dramatic change from the current situation. Organisations need to stop automating for the sake of it, only eliminating the transactional elements because there is good reason to do so.

By being too keen to automate, organisations lose site of the need to have humans in the process, which may in turn increase risk. Until such times as bots and AI have the EQ we discussed before, they will miss out on the human aspect of detecting fraud or seeing the human thought process behind decision-making.

This is a more responsible approach, but also, from a risk point of view, protecting organisations against the loss of the crucial human element in some tasks.

About the Author

Dawn Tiura is the CEO and President of SIG, SIG University and Future of Sourcing and has over 26 years’ leadership experience, with the past 22 years focused on the sourcing and outsourcing industry.

In 2007, Dawn joined SIG as CEO, but has been active in SIG as a speaker and trusted advisor since 1999, bringing the latest developments in sourcing and outsourcing to SIG members. Prior to joining SIG, Dawn held leadership positions as CEO of Denali Group and before that as a partner in a CPA firm. Dawn is actively involved on a number of boards promoting civic, health and children’s issues in the Jacksonville, Florida area. 

She is a licensed CPA and has a BA from the University of Michigan and an MS in taxation from Golden Gate University. Dawn brings to SIG a culture of brainstorming and internal innovation.

Dawn provided some great insight and thought-provoking ideas at the Big Ideas Summit Chicago 2019 this week. If you weren’t able to be there on the day and couldn’t get there as a Digital Delegate, don’t worry. You can still sign up to access all the great content by clicking here.

Procurement 2030: Would You Report To A Robot?

Can leadership be automated? Will AI soon take over procurement negotiations, communications and problem-solving? Once thing is for certain – no skill-set will remain uniquely human forever.

Click image to get your copy of Procurement 2030: Level 3.

What is your human advantage?

With 42% of the average workload in procurement expected to be automated by 2030, now is the time to take stock of our skill-sets and focus on what makes us uniquely human.

Today, the automation of core procurement skills such as data analysis and market research is well underway. Lines are being drawn between those skills that AI has already mastered, those that will be automated in the future, and – critically – the areas where humans still have the advantage over machines … and that’s where soft skills come in.

However, categorising procurement skill-sets into 1) core skills for AI and, 2) soft skills for humans oversimplifies the issue. It ignores the fact that the creeping wave of automation increasingly includes soft skills such as communication and problem-solving. 

Robotic leadership?

Avoid the trap of thinking there are particular skills that AI will never be able to replicate. Surprising results in this research, for example, reveal that very “human” skills such as negotiation and even leadership are seen as likely to be automated. Robots are currently being trained to read and respond to the subtlest of human facial expressions.

With this in mind, our research identifies core procurement and soft skills where – for the foreseeable future – humans hold a unique advantage. The ability to influence others, build relationships and think creatively have emerged as stand-out skills that will enable us to future-proof our careers on the cusp of the robotic age.

Let’s recap.

Level One of this four-part series by Procurious and Michael Page UK examined the forecast for procurement and the threats and opportunities facing the profession. Level Two shifted the focus to the practicalities of procurement and supply chain management’s evolution against the backdrop of a technological revolution.

This report, Level Three, dives into the core procurement and soft skill-sets to understand exactly which parts of our roles are expected to be automated, and offers advice on the skills that top CPOs will be hiring for by the year 2030. 

AI and Core Procurement Skills

Determining customer needs, developing supply strategy and delivering stakeholder value are not only considered to be the most important core procurement skills, but also the least likely to be automated.

Procurement professionals who wish to develop their skills in determining customer needs (both internal and external) should work to improve their ability to build relationships, listen carefully, challenge assumptions, and always look for opportunities to connect the dots, help others and add value.

AI and Soft Skills in Procurement

Among the top four soft skills nominated as most likely to be effectively automated, problem-solving, leadership and negotiation have emerged as unexpected results. Robotic problem-solving is an entirely different concept to human creativity and innovation. AI has the superior ability to search and analyse data – for example, the answer to an engineering challenge may already exist in your files, but has been forgotten by human staff. Given the right search parameters,AI can identify the solution.

Would you feel comfortable reporting to a machine? Robotic leadership is a fascinating concept. Robots may very well have the ability to check your work and track your KPIs, but are not yet capable of motivating or inspiring others, or picking up on the human nuances that are a part of powerful decision making.

Negotiating robots already exist, and may soon be considered very useful for conducting low-level, emotionless negotiations that involve no ambiguity or complexity. For strategically important negotiations, however, human skills such as awareness, empathy and flexibility will always have the advantage.


Interested In Learning More?

This content-packed report also contains links to relevant thought-leadership from Procurious and Michael Page UK, including videos, blog articles, podcasts and webinars.

And don’t forget … part 4 of the Procurement 2030 report will be released before the end of the year!

CLICK HERE TO DOWNLOAD PROCUREMENT 2030: LEVELS 1 to 3.

4 Reasons Why Your Organisation Isn’t Embracing Cognitive

In the battle for capital, how does procurement ensure its cognitive projects come out on top?

At last month’s London CPO roundtable; Amit Sharma, Global Procurement Practice Leader for Cognitive Process Services (CPS) –IBM led our attendees in a discussion on how procurement leaders can ensure their cognitive projects come out on top.

There is so much potential in cognitive technology to transform the role of procurement. It will allow professionals to do dynamic forecasting, telling you when to raise acquisition and awards contracts to a particular supplier based on a triage.

“For procurement, maintaining our relevance to the organisation beyond cost savings is imperative” said Amit.  “[Procurement pros] need to embed the latest in technology as best practise into the business as it will free up our time and help us to move from transactional to strategic management.”

“The logic is unquestionable.  We know the sophistication of AI is going to come. It’s a question of when, not if.”

But when it comes to making the leap to cognitive, which can do a world of good for analytical and predictive analysis, organisations are still hesitant.

Procurement needs to make the business case for how cognitive can add long-term value and, as Amit reminded us, “If you’re not convinced, you can’t convince someone else”

Throughout our discussion, four key reasons for an organisation’s reluctance to embrace cognitive tech became apparent.

1. Remaining skepticism at the value of cognitive

As Amit explained, cognitive technology like Watson can help procurement professionals to analyse reams of data. It would, for example, allow users to plot the price at which they are being charged for something by suppliers and analyse how the index has moved in past [x] years. Five years ago this process would have been extremely time consuming but with the index data, the system can quickly tell you exactly where you’ve been overcharged.

So it all sounds great. But in reality, business leaders are often skeptical about the actual cost savings brought about by this kind of analysis.

Do you genuinely make better decisions in the long term by having so much data at your fingertips? Or can you have just as much success through effective negotiations with your suppliers?

Amit’s response to this “If you’re not doing spend compliance – you don’t know if you’re compliant. If you’re not analysing this data, you don’t know the potential cost savings.”

“I spoke to a CPO who thought their processes were good. [But it was discovered that] there was a 40 per cent unit price difference across the company in the same category, simply because the left hand doesn’t know what the right hand is doing!”

2.  Spend within organisations is fragmented

One key problem for procurement, when it comes to implementing cognitive technology, is that the CPO doesn’t always have the authority to drive transformation. Perhaps they are reporting to a CFO who doesn’t see value in cognitive tech or the spend might simply be too fragmented across the business. When it depends on lots of other people, procurement are unable to drive change effectively.

As one of our roundtable attendees pointed out “there are organisations I know who can’t justify the need to implement Ariba to their CFO- let alone cognitive technology!”

3. Trouble looking at the bigger picture

Several of our roundtable attendees cited short-termism as a key reason for their organisation’s lack of cognitive adoption. “The mistake we make is that we look at opps in a tactical way and not at the bigger picture,” said one CPO.

“For example, we know that there will be headcount reduction in the coming years and we will benefit hugely from cognitive tech, but articulating that at a hollistic level to the CFO and explaining it as a 5-year journey is the challenge”

4. Confusion about AI

Remarkably, one of the biggest challenges remaining around  the uptake of cognitive technology is a universal lack of understanding of what it actually is and the distinctions between different terms.

“You can start talking to a group about AI and within a few minutes people are talking about blockchain, as if the two are interchangeable,” said one of our attendees. “People need to have a clearer understanding of the buzzwords ; AI, blockchain cognitive etc.”

Of course, there are people who know a little and people who know a lot. And that’s a challenge in itself.

Read more here on the insightful discussions had at our London CPO roundtable. 

One Step Closer To Invoice Automation…

How can smart coding functionality take invoice automation one step further…?

Depending on your organisation, the maturity of your invoice processing is likely varied even across your own internal workflows for different invoice types.

And like many others in your shoes, your goal is to get those things as automated as possible – regardless of invoice type – and shoot for 100 per cent invoice automation. The good news is full invoice automation is an attainable goal with innovation available in e-invoicing solutions today like smart coding.

What is smart coding?

Smart coding helps customers further automate their invoice processing of non-PO invoices, going a step further towards touchless invoice handling. With smart coding, invoices that are not automated by purchase order matching, payment plans (schedule, budget or self-billing), or automatic coding templates can now be automatically coded with minimal human interaction.

Why should you care about smart coding?

Smart coding speeds up invoice processing and improves productivity.

Traditionally, non-PO invoices are automated with business rules that are very laborious to manage. Finding a correct cost allocation is typically a challenging task for employees who are not familiar with bookkeeping rules, especially when there is no purchase order to copy information from. It requires the AP clerk to spend a lot of focus on this type of invoices – researching the origination of the invoice, reaching out to others in the business to ask questions and making an educated guess as to the best place to code the invoice. All of this takes time and often delays payment of non-PO invoices.

Smart coding automates those manual steps, so employees can easily code an invoice with a click of a button to automate more of the process. The solution leverages big data to analyse historical transactions, ultimately providing a highly reliable recommendation to the user that can also be complemented with business rules. Not only does this simplify the process for the user and save time in processing the invoice, it also reduces the need for the AP department to rectify erroneous coding lines at month-end.

How does full invoice automation prepare me for the future?

Everyone is talking about machine learning and AI – and invoice automation and e-procurement are certainly areas of application for these emerging technologies. But there a couple of things you must do today to ensure you’re ready when those technologies become the new norm. Use smart coding to help you:

  1. Automate as much as possible: Machine learning and AI are layered over systems, so you want to be as streamlined as possible in preparation for those applications. To do this, set your goals on a high level of automation. And this doesn’t just mean adding technology over clunky processes. As you mature your systems and strategy, make sure you’re re-engineering processes where necessary so workflows are optimized too.
  2. Get financial data: One major benefit of full automation is the central collection of all your financial data in one solution. Data is what feeds technologies of the future. Machine learning and AI are not effective in purchase to pay without a complete, ever increasing source of financial data. If you want to embrace machine learning applications, capture every possible piece of financial data in your purchase-to-pay system today.

Basware has the most advanced invoice automation solution in the world and we’re constantly improving it. Based on 30+ years in the industry, we’re rolling out features and functionality that continue to deliver the ultimate efficiency benefit to customers. With the largest open network, we have the unique ability to capture the most data across customers and combine that with third party data to deliver what customers need now and in the future.