There is an urgent need for the digitalisation of the procurement function, according to a new report from leading smart sourcing solutions organisation Globality

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There is an urgent need for the digitalisation of the procurement function, according to a new report from leading smart sourcing solutions organisation Globality.

The report, which can be read in full here, states that 9/10 of global procurement leaders are committed to the urgent transformation of their operations and processes to become more resilient, agile and future-proofed in these uncertain and volatile times.

The report, which surveyed 170 global procurement leaders, claims that innovative and emerging technologies are being harnessed in order to better arm CPOs as they face global inflation, COVID-19 and geo-political crises such as the war in Ukraine.

Those surveyed also cited the growing need to fully digitalise operating processes in order to improve efficiency and boost cost reduction, while enhancing agility, resilience and value. 90% expected operational transformations within the next three years.

The report covers:

  • Digitalisation drivers
  • Future procurement operating models
  • Digital work in the future
  • Procurement process digitalisation
  • Digital supplier management
  • Challenges to progress
  • Value of digital adoption
  • Change manifesto

“Everyone recognises this shift, 99% of companies plan to make changes to their operating model over the next three years,” says the Globality report. “In 2020 and 2021, change has been thrust upon us all. In 2022 and beyond companies are owning the shift. In our research, we have seen the procurement leaders outperform their peers through a focus on resilience and cost in the short term. However, to maintain this competitive advantage in the long term, they need to adopt a new digital-led operating model.”

That said, 81% cited a lack of organisational support with regards to digitalisation, indicating a need for further engagement at some enterprises. 68% say that digitalisation will continue to increase business self-service, while 50% of organisations aim to move to a business procurement-centric organisation, acting as advisors and business partners versus executing transactional processes.

EyeCare Partners works in partnership with clinicians and healthcare leaders to achieve the best patient and business outcomes and this…

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EyeCare Partners works in partnership with clinicians and healthcare leaders to achieve the best patient and business outcomes and this has had dramatic results, such as a 1,500% revenue growth since 2015.

EyeCare Partners is growing through acquisitions, by providing strategic capital and operational support to its network of partner practices in 680 locations across 18 states. In February 2020, this growth was boosted when Swiss private equity firm Partners Group acquired a controlling stake in EyeCare Partners. “They’re a very interesting group,” he says. “They’re very heavy on investment, plus they have a very, very impenetrable and robust sustainability platform too, which is very near and dear to my heart through my time at Unilever,” This level of growth is fuelled significantly by increasing demand for eye care over the longer term, driven by an ageing US population and an increased incidence rate of eye diseases. But this level of growth requires an agile and resilient operational enterprise.

Our cover story reveals a massive procurement transformation programme at Zendesk

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Procurement transformation is the hot topic this month as we speak to Rendi Miller, VP of Strategic Sourcing and Procurement at Zendesk. Miller is a procurement evangelist and transformational leader who is clearly energised as she delivers meaningful change to the function at Zendesk.

“What I’ve always enjoyed about procurement is the visibility into what the entire company is buying, from Marketing creative services to IT and Engineering technology to office furniture and everything in between.”

“Procurement has insight to trends before they become mainstream that gives us the ability to research new partners, technologies and solutions to start addressing the needs of the business early on. Being in procurement offers an awareness to nearly every aspect of the company.”

Read the latest issue here!

According to Miller, trust is absolutely critical to success because without that, “there is no reliability, there’s no confidence and there’s no relationship”, says Miller. “That’s something I emphasise with my team. Trust must be earned, but trust is also given. I empower them to be the leaders that I’ve hired them to be…”

Elsewhere, we sit down with Procurement Excellence Lead at Antofagasta Minerals, Christophe Le Flech, to discuss the state of procurement in the South America mining industry, and the work he’s doing to make a difference. We also talk to Convex Insurance’s Head of Procurement & Tactical Change, Vivek Pai… and discuss diversity in the workplace with Silvia Simon, LATAM Procurement Senior Manager at Mercedes-Benz Brazil. Plus, we look at 10 ways to optimise your digital procurement scouting approach with ProcureTech.

Enjoy the issue!

Andrew Woods

Bringing a wealth of experience to the table, Kuvesh Ayer, CPO for the New York Metropolitan Transportation Authority discusses procurement transformation and being prepared for anything…

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Bringing a wealth of experience to the table, Kuvesh Ayer, CPO for the New York Metropolitan Transportation Authority discusses procurement transformation and being prepared for anything…

Tell us about yourself and your current role…
I’m currently the chief procurement officer for the New York Metropolitan Transportation Authority (MTA). The MTA embarked on a huge transformation effort across all its operating divisions to transform the organization into a more efficient, effective one.

I got a call one day asking if I’d be interested in this position and I decided, “Okay, it sounds interesting and very challenging,” and decided to throw my hat in a ring. Lo and behold, it’s two years down the line – it’s gone like a flash. Overall, my responsibilities include managing the MTAs procurement and sourcing operations, which also include the logistics, warehousing, and distribution aspects...”

What is excellence in procurement – and how we can encourage it? We chat to Olivia Brown, a Managing Consultant…

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Olivia Brown, a Managing Consultant with Rowe Advisory UK.

What is excellence in procurement – and how we can encourage it? We chat to Olivia Brown, a Managing Consultant with Rowe Advisory UK…

Tell us a bit about yourself.

I spent the first 16 years of my career as an employee with oil and gas operators, both here in the UK and internationally, so I have a solid foundation in working in contracts and procurements. Later in my career, I became focused more on general management roles. Those roles combined led me to understand what good business looks like, and the things to avoid – not just within the function, but more broadly within the wider business context. I started working as a consultant with Rowe Advisory in 2017, initially working in support of clients in overseas, in Australia.

Give us some background on Rowe Advisory.

Rowe Advisory was established in 2013 by a very inspirational lady called Jody Rowe. I started to get involved with some of the Australian clients in 2017, working remotely from here in the UK to support them in redefining, updating, reviewing their procedures and their processes.

Typically, what we find is that a client will have a particular requirement for an area of concern, so we will go in and start to address that and help support them. From there, we often get involved in other areas for improvement as a consequence. 

In 2020, Rowe Advisory set up a branch here in the UK. It was difficult timing because we were launching it during lockdown. We had the challenge of the pandemic which was also compounded by the oil price crash. However, it was a real opportunity for us to reestablish some individuals within our network and reconnect with previous colleagues to tell them who we are and what we do, and make them aware of how we can help as in when the need arises.

What does ‘procurement excellence’ mean to you?

For us, it’s about aligning the strategy and the delivery of third-party spend with the needs of the business. It’s really connecting the department’s activity with the business priorities. To best achieve that, we see a focus on the overall procurement operating model. As previously mentioned, often there are areas of concern already which CPOs recognise can improve.

Generally, when we get involved with a new client, we will review the whole operating model to be more holistic in the review and understand how joined-up the department can be in providing that functional excellence back to the business. It’s really about the department adding value back to the business and establishing credibility through delivery of value to the business. 

We’ll look at the people, the process, the systems, and the tools to really focus on how the department can manage risk, provide clear strategic planning, align with the business objectives, be innovative, be creative, and also collaborative internally and externally. 

We’re working to elevate the role of the procurement department. It has the potential to provide significant benefits to the business, and they extend far beyond the P&L impact. The events of the last 18 months have really proven the importance of procurement departments and non-financial performance incentives; those non-financial performance metrics have become more integral to the priorities for procurement. That being said, we recognise the need to get the basics right first so it’s about having clarity on rules and responsibilities, both within the department and the business. 

What have you seen by way of sector differences or trends?

The most interesting thing for me, having come from a strong background in oil and gas, is that a lot of the areas of focus that I’ve talked about – specifically identifying areas of improvement and what functional excellence can look like – are very much sector agnostic. The tactical interventions do vary depending on each client, so the areas of focus will always vary – but that’s true within any sector. We’ve seen that transcend into others. The fundamentals of what good looks like in procurement are, we’ve observed, sector agnostic. 

That’s been very interesting. It’s allowed us to provide diversity of thought into new sectors. If you think about demand planning and category management, we’ve seen with some clients where it works very well, and we’ve been able to translate that knowledge and experience in working with them in embedding that, sustaining it, and building on it. We’ve been able to translate that into other sectors that are less familiar with the concepts of category management and category planning, and the importance of that in the upfront strategic planning where real value can be set for procurement.

One thing we do find in some sectors more than others is that the procurement department is seen as a transactional function, and there is absolutely a strong requirement for there to be good transacting within any procurement team. But in the context of functional excellence, what we try to do is to explain the value that can be delivered through moving beyond that phase of the department into the strategic, and doing that in an appropriately segmented way so that it is differentiated based on value and risk – and other relevant factors – but ensures that both the department and the business are focused on those contracts that are key to the delivery of the business.

How do you support your clients by driving change within their procurement departments?

We work on ensuring that the focus is in the right place to deliver value, getting the transacting right and then also, of course, post-award. The contract is then executed, and it’s not about necessarily just putting it on the shelf and leaving the business to manage it. Certainly, for a number of contracts, it’s about managing those contracts for delivery and being clear on the role that the procurement department plays in that process. A further development on that is, again, how many of those need to be strategically managed? How do you strategically manage the relationship with key suppliers to, again, further leverage the value through innovation, being creative, and working together to further enhance the value that can be achieved?

The case for change is important because people’s response will be, “What’s in it for me? We’ve done it like this for years and it’s been fine, so help me understand.” And you need to kind of take people on that journey of change. Clarity on single-point decision making, understanding that when a decision is taken, that’s not the start of a conversation on the matter – it clarifies the need to move on. 

Tell us about your sister company, Promitheia Procurement.

Promitheia Procurement was established 2020. It is an online platform for procurement templates and also advisory services. It’s a web-based system so anyone can go on and buy, and download the whole series of procurement templates across the whole life cycle. It ranges from demand planning, strategy setting to people and competencies, and skills matrices, development planning, and performance management, through the procurement life cycle itself, through the transacting, into post-award, and supplier relationship management. So, they’re documents which can become available to companies at the click of a button, which is fantastic. It allows us to diversify further into new sectors who may otherwise not be able to come to us for the full suite of consultancy services. 

What do you enjoy most about your work? 

We have that real passion for procurement and want to really be ambassadors for what good can look like – and we want the clients to feel that as well. It can never really be implemented and sustained based on a consultant coming in and telling you how to do it. It’s very much about working alongside the client in their particular environment to understand how best to do that.

Procurement transformation is at the heart of our chat with Tod Cooper, Director Procurement at the Department of Corrections in New Zealand

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This month’s exclusive cover story features Tod Cooper, Director Procurement at the Department of Corrections in New Zealand, who reveals all regarding the strategic restructure of the procurement function.

Read the latest issue here!

Procurement transformation is at the heart of our chat with Tod Cooper, Director Procurement at the Department of Corrections in New Zealand
Procurement transformation is at the heart of our chat with Tod Cooper, Director Procurement at the Department of Corrections in New Zealand

Most of us like to think that if we were presented with the chance to do something positive and societally significant for our country and its indigenous people, in particular, we would.

And that’s exactly the opportunity Tod Cooper, Director Procurement at the Department of Corrections in New Zealand, has grasped with both hands, with the department’s dedication to supporting Māori. 

Business transformation through leadership has been a major part of Cooper’s working life, preparing him for the challenges he’s faced at the Department of Corrections.

“It’s a big personal passion for me,” he says. “I’m not a guy who likes to sit still. Continuous improvement is a big thing. I’m always asking myself how we can make things better, looking at new ways of re-engineering, and getting good people around me who can enact my vision of things.

I’m a typical extrovert who’s easily distracted by the next thing, so it’s really important to have a good leadership team around me that understands the vision and can pull me back in.”

Elsewhere, we also speak with Dean Bennett, VP of Procurement, and Mike Cowling, VP of Global IT at BeiGene, about the benefits of a strong collaboration between procurement and technology, and what makes the company so special. Plus, we have an exclusive ‘provenance in the supply chain piece’ from IBM’s Blockchain Leader, Winston Yong.

Enjoy the issue!

Andrew Woods, Editorial Director

Welcome to the first CPOstrategy of 2022! We decided to kick off the new year in style with our best…

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Welcome to the first CPOstrategy of 2022!

We decided to kick off the new year in style with our best issue yet!

Our exclusive cover story features a fascinating discussion with Sean Park, CPO of software organisation Splunk, talks us through transforming the procurement function from one that was deliberately immature, to the powerhouse of efficiency it’s now becoming.

Read the latest issue here!

When Splunk brought Park in to join the team, he knew it was time to make a change and get serious about the bottom line. The decision was made to put in place a more centralised procurement and sourcing function; Splunk was rapidly growing, and it didn’t want friction, but rather controls and guardrails in place to scale the company. It was very much a natural evolution for the business – a pattern Park has watched occur before. This put him in an ideal position to push the new vision forward.

“The first step was to undertake an assessment of the function,” he says. “What are our strategic objectives? How does that fit in with the corporate objectives, or those of the finance team? What are our processes and policies? How are we resourcing the organisational structure? How do we source? Do we want a category management structure or a business unit focus?”

Elsewhere, we have an incredible rollcall of equally fascinating articles on Atotech, Beeline, Delivery Hero, plus an engrossing selection of Procurement Leaders’ procurement transformation success stories. Plus, much, much more.

Enjoy the issue!

Andrew Woods, Editorial Director

A major recent step for Philips has been casting aside traditional indirect procurement and implementing a new-and-exciting approach under the umbrella of Spend Management. We take an exclusive look behind the scenes…

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Our exclusive cover story this month takes an in-depth look inside the procurement function at Philips; the leading Netherlands-based health technology company, which is improving people’s health and well-being through meaningful innovation.

Read the latest issue here!

To achieve the company’s aim to improve 2.5 billion lives per year by 2030, Philips has been through a major transformation in the past decade. Besides overhauling the business, the functions – including indirect procurement – also needed to adapt.

A major recent step for Philips has been casting aside traditional indirect procurement and implementing a new-and-exciting approach under the umbrella of Spend Management. Alexander Visser is the Leader of Spend Management, and the architect of this change and he takes us through this incredible transformation…

Plus, we speak exclusively to CPO of Ooredoo Algeria, Saber Chrigui, who describes how he took the branch from struggling to a shining example for the entire group, through managing waste and costs, and dramatically repositioning procurement. We also catch up with Gudrun Gunnarsdottir, Procurement Manager at Vodafone Iceland, about how being based on a tiny island is no barrier to procurement excellence and keeping a finger on the pulse of technological advancement…

And another great exclusive this month, focuses on RHI Magnesita (RHIM); the global leader in refractories – its refractory products are used in all the world’s high-temperature industrial processes. The creation of RHI Magnesita (following the merger of RHI and Magnesita in 2017) saw the continuing transformation of procurement from a cost-saving function into a strategic business partner gather pace. We speak to RHI’s Michael Leitner, VP Procurement Europe & CIS & Turkey…

Enjoy the issue!

Andrew Woods

The Digital Insight team decided to find out more about procurement’s relationship with data, intelligence and its maturity…

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Modern procurement has undergone so much change in recent years, it is finally achieving recognition as a true strategic business enabler. Empowered by data-driven insights and digitised systems and tools, procurement occupies a unique position at the heart of an enterprise’s operations, supply chains and growth.  How are leading companies creating sustainable digital capabilities and how do companies do this at scale?

The Digital Insight team decided to take a deeper dive into this fascinating area and assembled an incredible panel of digital procurement CEOs to find out more and share procurement’s relationship with data, intelligence (and its maturity), as well as the opportunities emerging from these insights and the technology that captures them too. You can watch the full video discussion here…

The panel covered

Data in procurement

  • With more access to data in procurement than ever before, how does this differ from 5-10 years ago?
  • Where is this data coming from?
  • What does this mean for the role of procurement?

Evaluating and dealing with risk

  • Is there more risk in the supply chain now than ever before?
  • How has evaluating risk changed for better or for worse?
  • Are the risks becoming increasingly dynamic and changing?

Opportunities in procurement

  • With the capturing and understanding of data, is this now a unique opportunity for procurement, to act as an “intelligence hub” across multiple domains from risk to sustainability and cost to innovation?
  • How do we capitalise on this opportunity?
  • What role will ProcureTech vendors/players have in this?
  • How important is it for business to adopt a continuous approach with respect to the data that they gather on their vendors and how do they feed this data into their digital procurement platforms?

Joining The Digital Insight were…

Ilya Levtov (CEO Craft)

Craft serves large companies (Fortune 100, FTSE 100) and government entities with comprehensive insight and intelligence on their supply chains.

Success doesn’t happen overnight

“…the challenge and struggle that a lot of enterprises are finding themselves in is how to filter down and get to the right answers. The only thing we’ve seen reliably successful is to take a spirit of experimentation and curiosity and not to be hell bent on getting the answer or a positive ROI for the CPO next month, but to say, it’s going to take some back and forth. That’s the way we personally love to work with clients. We say: there’s a ton of stuff you know, there’s a ton of stuff we know, but we’ve got to work together and iterate with different data sets, different models, different risk models, in order to come to the right answers. It’s going to take some time, but we will make progress if you take a medium to long-term view. That’s when you’re going to get those answers and those models working… not overnight.” Ilya Levtov (CEO Craft)

Aleksandr Yampolskiy (CEO Security Scorecard)

Security Scorecard pioneered the way in which it collects all kinds of data points from all over the world and how it uses those data points to reduce them to a score representing the likelihood of a company to suffer a data breach. Security Scorecard is utilised by over 1,500 plus top enterprises all over the world to hold their suppliers and third-party vendors accountable, and to make insurance underwriting decisions.

Now is the time for procurement!

“Now is actually a great time to be in procurement. Procurement is being disrupted through the proliferation of new types of information and data that enable us to make better decisions. For the first time, it makes it possible for procurement to move from being a support function, to being a business enabler and a value creator at the forefront of the innovation. It’s a very exciting time to be in the procurement space today.” Aleksandr Yampolskiy (CEO Security Scorecard)

Cynthia Figge (CEO CSRHub)

CSRHub is a big data platform and one of the largest aggregators of structured ESG data, covering companies worldwide.

Risk in the supply chain

“…risk has gone up dramatically in the supply chain, at least from an ESG or sustainability perspective. Some of the data has been backward looking, in other words, if there is some great disruption or something bad happens, then there are news ripples and that is important. But now where I’m seeing companies shifting is they really want to know about a company’s performance across all these dimensions of environment, social and governance, so that there can be some sense of predictability and an ability to screen across actual performance issues in advance of some kind of a bad event. We’re seeing a demand for that data and that understanding of the suppliers in the value stream: are they really measuring up? Are there some risks there in terms of what we can see around performance and benchmarking?” Cynthia Figge (CEO CSRHub)

Lance Younger CEO of ProcureTech

ProcureTech are building the digital future of procurement. Solving the most pressing social, environmental and economic challenges requires new thinking and a new platform for procurement leaders, entrepreneurs and the digital procurement ecosystem.

ProcureTech is home to the ProcureTech100 – the definitive global 100 pioneering digital procurement solutions.

Together with ProcureTechSOURCE and ProcureTechEXPERTS, they will accelerate, smarter solution selection and digital procurement ecosystems that will empower procurement transformation.

The tipping point of procurement

“…We’re at a tipping point for procurement in terms of a transformation, which began at the start of this decade. Most procurement functions, if you were to assess them from a digitalisation or data perspective, will score three to four, maybe five (out of ten). You have one or two that are leading lights, but I think that procurement overall is struggling to keep up with the changes in data access and data proliferation and not because of the technology, but because of the people. We don’t have enough people with the right skills to be able to help procurement transform at the pace at which we need it to change.”

According to The News, Pakistan’s largest oil refinery – Byco – has signed an agreement to implement SAP Ariba DSN…

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According to The News, Pakistan’s largest oil refinery – Byco – has signed an agreement to implement SAP Ariba DSN (Digital Supplier Network) and Sourcing Suite – the first in its nation.

Byco stated: “The initiative will automate the procurement process enabling a paperless process, significantly eliminating errors and unnecessary delays, as encountered in traditional procurement to the payment process.”

Fayaz Ahmad Khan, Vice President Commercial Byco Petroleum, added: “Byco has always been at the forefront of innovation and implementation of processes that are in line with global best practices.

“The deployment of SAP ARIBA DSN and Sourcing Suite will be another first by Byco as an industry leader in Pakistan.”

Fayaz Ahmad Khan, Vice President Commercial Byco Petroleum

He stated that, not only will this move improve efficiency in procurement, but also create better transparency and visibility across the business for all stakeholders.

Welcome to another bumper issue of CPOstrategy magazine…

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Our cover star this issue, Willem Mutsaerts, is both the CPO and CSO of Givaudan, a global industry leader creating game-changing innovation in food and beverages, and inspiring creations in the world of scent and beauty. The duality of his role is quite unique and makes for a fascinating discussion as to how procurement makes all the difference for Givaudan’s sustainable ambition. It’s a revealing insight…

Read the latest issue here!

Will also dive deep into Procurement Leaders’ latest report Procurement as a Growth Engine (partnered by Ivalua), which explores how procurement can bring new opportunities for growth, as forward-thinking business leaders become increasingly aware of the huge potential that exists in the upstream supply base.

Elsewhere, we move away from what procurement can do in the private sector to what it can do for the local communities of the world, specifically, procurement in West Mercia Police. We peek behind the curtain of a major procurement transformation that will see the local UK police force empower its officers to protect and serve their local communities.

There are also fascinating insights from Lance Younger, Dr Elouise Epstein and many many more..

Enjoy the issue!

Dale Benton

With 2025 deadlines looming for ambitious corporate public pledges around sustainability, this should be top of the business agenda for enterprises in 2021. However, are organisations acting fast enough?

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Worryingly, every five weeks that passes represents 1% of our decade. Aspirations of operating more sustainably at some point in the future are now becoming a much closer reality, which means organisations have targets that they need to meet over a relatively short time frame. This is especially true when it comes to ‘net zero’ emissions pledges – perhaps the most pressing climate concern the planet is facing. For example, by 2030, Unilever has committed to halving the greenhouse gas emissions of their products across the lifecycle, while Heineken has set an 80% target reduction. BP is facing an even bigger challenge as an energy company, leaning away from fossil fuels and committing to net zero carbon from their operations by 2050. Written by Mark Perera, CEO, Vizibl 

Therefore, with only a few years remaining until some of those deadlines, clearly now is the time for enterprises to take decisive action. 

Many organisations still don’t know how they’re going to achieve these targets. However, given the urgency of the issues, they’ve launched their efforts regardless, anticipating the discovery of further solutions along the way. 

Sustainability delivers more than just the environmental benefits 

Alongside the need to protect our planet, hitting these targets is actually key for the survival of some of these businesses. Strong sustainability performance pays dividends in opportunities for growth, increased returns on capital, and in managing threats to the business, with McKinsey finding that the value at stake from sustainability risks can be as high as 70% of EBITDA. 

Given that 50% of the Standard & Poor’s 500 will likely be replaced within the decade, companies must look beyond business as usual towards the strategies that will shore up their own survival – especially in our post-COVID environment where many will face stiff competition. With record private equity, a robust M&A market and the growth of many startups with billion-dollar valuations, not to mention the impact of the pandemic and an economic decline, there will be plenty of turbulence in the road ahead. 

We recently hosted a webinar around sustainability, which featured speakers from Unilever, Heineken and BP, where we discussed all of these issues and more. Interestingly, all three organisations were in agreement that consumer relevance will be key to organisational longevity and the ability to attract talent will also be central to business success. Consumers are very much driving the sustainability agenda, therefore setting and meeting sustainability targets will be key driver for business continuity. 

Enterprises are driving towards stakeholder capitalism 

This focus on doing right by consumer and employee values corresponds to a wider movement towards stakeholder capitalism. This drive advocates shifting away from a sole focus on maximising shareholder value towards a company strategy which creates value for all its stakeholders – from customers and employees, to suppliers, communities, and the environment. 

Along with making themselves accountable to a broader set of stakeholders, organisations should also be drawing from these stakeholders to meet sustainability targets. Likewise, leveraging from a wider ecosystem will also help to meet these goals; partnering for value to increase the bottom line will be a key procurement trend in 2021. 

Seeing as 80% of company emissions and up to 90% of their impact on biodiversity and natural resources originates in the supply chain, it is not surprising that companies are looking past internal operations when pursuing ambitious sustainability targets. Given also that 50-70% of company innovations originate externally, it makes sense to look beyond the boundaries of the organisation and to the broader ecosystems of suppliers to source new solutions. 

Working with a broader ecosystem of suppliers to foster innovation 

One great example of this kind of partnership is an initiative that BP is spearheading. As the company works towards net zero for its tech and IT estate, BP is moving away from high-power data infrastructure in favour of forging deep partnerships with cloud providers. The cloud providers also have net zero commitments of their own, which they can support using renewable energy sourced from BP. This partnership presents a win-win situation where both companies can hit their targets in tandem. 

What we are also seeing is that this is changing the role of procurement. Instead of being viewed as a function that ‘protects’ the company from its suppliers by continuously driving down costs, procurement is now looking to  collaboration and partnerships to find the innovation that will help the organisation continue to grow. 

And as procurement moves away from a single-minded focus on cost-cutting, it will facilitate relationships which in turn deliver on key business strategies like sustainability and growth. 

How procurement can drive initiatives to meet sustainability goals 

To this point, procurement has a great role to play in helping an organisation meet its sustainability targets, given that the function has historically been curious and hyper-diligent when it comes to costs. Moving forward, enterprises need to apply that same rigour when it comes to sustainability by asking searching questions about energy and water usage, emissions impact, and how we are affecting our communities both locally and on a global scale if we bring that level of curiosity and collaborative problem-solving into supply chains, we’ll have a big impact on business longevity and help to meet those lofty sustainability goals that are closer than we all feel comfortable with right now. 

New research found that 43% of UK businesses say that the rate of digitalisation within procurement is low, which is impacting agility and preventing businesses from minimising risk…

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If we’ve learned anything from 2020, it is that we cannot predict the future. The COVID-19 pandemic significantly disrupted many supply chains, as businesses became dependent on procurement teams to help mitigate the impact by identifying and onboarding new suppliers in different regions. 

However, a significant number of organisations have been hindered by a lack of procurement process digitalisation. New research found that 43% of UK businesses say that the rate of digitalisation within procurement is low, which is impacting agility and preventing businesses from minimising risk. 

The importance of process digitalisation goes beyond navigating the immediate effects of COVID-19. Businesses that are reliant on manual processes are not only wasting an average of £1.94m per year in staffing costs, they are also preventing procurement teams from focusing on high value tasks. Savvy businesses have digitised procurement processes as a springboard to create a competitive advantage for themselves, as they can better identify new revenue opportunities, unlock innovation and improve profitability. Over the coming years, UK businesses need to move quickly to digitally transform procurement and ensure they are not left behind.

Procurement process digitalisation remains in the slow lane

As things stand, organisations still have a long way to go, with many failing to digitalise procurement processes. Just over half (55%) of UK businesses have digitalised invoice processing, while less than half have digitalised purchasing (42%) and budget management (33%). Businesses are even further behind in digitalising strategic processes such as spend analysis (32%) and risk management (26%). Clearly, there is significant room for improvement for organisations looking to make informed decisions, identify opportunities to create revenue, or collaborate with suppliers.

Worryingly, most businesses have not digitalised supplier onboarding or sourcing processes. Identifying and bringing on new suppliers is critical for businesses searching for new opportunities to collaborate and innovate or react to a potential disruption, so digitalising the process should be a top priority. This is particularly true in times of crisis, as one of the biggest challenges UK businesses faced in reducing the impact of COVID-19 was identifying alternate suppliers.

Procurement teams are prevented from adding value

This lack of procurement process digitalisation is creating frustration for UK businesses, and holding them back from adding value. Eight-in-ten (81%) UK businesses say a lack of digitalisation is preventing them from collaborating with suppliers and internal stakeholders, while a further 83% believe it is preventing them from innovating and executing on new revenue streams and opportunities. Without the ability to collaborate or execute on opportunities to drive new revenue streams, businesses stand little chance of getting ahead of the pack.

However, when it comes to digitalisation, UK businesses face a number of challenges. The most common obstacles to digital transformation for UK businesses were their suppliers, technology, and processes. Clearly, collaborating with suppliers is still tough. But, as supplier visibility continues to be vital to innovation and identifying revenue opportunities, it is not a problem that businesses can leave unsolved.

A smarter approach to eliminate manual processes

Most businesses understand and recognise that digitalising procurement will help them gain a competitive advantage. Furthermore, UK businesses recognise the importance of digitalisation beyond this, with one of the biggest benefits being reducing their environmental impact. Sustainability continues to become a key differentiator, allowing for greater efficiency and waste reduction, while turning being ‘green’ into a competitive advantage for eco-friendly businesses. 

But to reap these benefits, it is clear a new approach is needed. Organisations need to adopt a smarter approach to procurement that can enable effective digital transformation, helping them to move away from managing processes over email, phone, or paper, to instead capturing everything digitally. This can free capacity for more strategic projects, improve access to insights for better decision-making and foster better collaboration by connecting internal stakeholders and suppliers. As a result, businesses are better able to identify opportunities to innovate, collaborate and grow revenues, giving them the chance to build better products and service offerings that will differentiate them from the competition. 

Digitalising procurement to combat uncertain times

n today’s uncertain and evolving landscape, procurement has become a much more strategic part of every business, but a lack of digitalisation is holding teams back. To create a competitive advantage, businesses need to digitalise manual and strategic procurement processes to provide teams with the tools they need, and give them back time to focus on creating value for the business.

Making procurement smarter can create an all-encompassing digital view of procurement and supplier management. This is increasingly important for businesses looking to restore growth post-COVID and ensure resilience for the next crisis.

Three key areas where procurement and supply chain should look to invest in 2021 and has a good business case to do so…

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The Brexit debate is over with the UK and EU finally agreeing on the trade and cooperation terms after Brexit. A lot has been mentioned about the negative impact of Brexit on the UK and EU business supply chains. However, I think it is an opportunity for businesses to review their supply chains and turn this change into a competitive advantage. In my opinion, the following are 3 key areas where procurement and supply chain should look to invest in 2021 and has a good business case to do so.

1. Sourcing capabilities

Most of the organisations I have worked with over the last several years go back to the same set of shortlisted suppliers and look to conduct negotiations and auctions to achieve short term goals. This could be working with the same pool of suppliers either in the UK or EU suppliers or in a particular global location, i.e. China. However, there have been significant changes over the last few years whether it’s in currency, new emerging supply markets, existing supply sources losing advantage, or even the overall cost of managing offshore supply chains vs. local changing dramatically. Brexit and Covid have further accelerated or exacerbated some of these changes. Having some dedicated resources now to understand market options and a full evaluation will really help understand organisations options they have and plan their future supply chains accordingly.

2. Strategic partnerships

With the unprecedented disruption in demand and supply over the last year, organisations have never more realised the need to have a different relationship with their suppliers. As the long-term changes from Brexit and Covid come into effect, organisations having close strategic partnerships with their suppliers will be the ones who will mitigate issues better or benefit from the opportunities. Strategic partnerships don’t have to be just long-term commitments but communication, transparency, and both parties working towards shared goals. Also, the key is to look at the criteria for selecting partners. While on a short-term basis, working with a supplier who can fulfil your immediate needs at the best price makes sense, unless you look at long term fit, you will never have true partnerships in place.

3. Supplier assurance and development

With Brexit, there will be significant regulatory and standard changes over the years and suppliers will need support to transition to new standards and procedures. Also, to allow the sourcing team to find new sources and locations, they need appropriate support to be able to assure and develop new suppliers. Too many businesses, see the role of supplier assurance team as limited to assurance only and have an auditor mindset, however, the key is that they are working more as a development team and helping develop suppliers to contribute to the business.

The deal agreed is described as a narrow deal as it allows the UK to gradually move away from the EU sphere of influence if that’s really what the UK wants to pursue. While the current relationship with the EU is the starting position, full changes from this deal will only be visible over the next couple of years. Businesses who will be making the right investments in their supply chain and procurement capabilities will not only mitigate issues as the changes come into immediate effect but also find themselves in a better place vs their competitors.

Lack of digitalisation preventing UK businesses from identifying new sources of revenue and opportunities to collaborate and innovate

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Research from Ivalua, a leading provider of global spend management cloud solutions, has found that almost half (46%) of UK businesses are frustrated by a lack of procurement process digitalisation. According to the study, 43% of respondents believe that the rate of digitalisation within procurement is low, while a third (33%) claim that procurement digitalisation is stagnant and hasn’t progressed in the last 12 months.

The research, conducted by Vanson Bourne on behalf of Ivalua, surveyed 200 UK-based procurement, supply chain and finance professionals to examine digitalisation in procurement. Eight-in-ten (81%) UK businesses say a lack of digitalisation is preventing them from collaborating with suppliers and internal stakeholders, while 83% believe it is preventing them from innovating and executing on new revenue streams and opportunities. Additionally, two-thirds (67%) of UK businesses say a lack of digitalisation reduces their ability to gain insights into spend and suppliers.

“As organizations look to restore growth post Covid-19 and ensure resilience for the next crisis, procurement can play a major role, helping identify opportunities to innovate and new sources of revenue. Procurement digitalisation is essential to enable unique business processes and improve collaboration with suppliers and internal stakeholder,” commented Alex Saric, smart procurement expert at Ivalua. “However, the current state of transformation in procurement is underwhelming. The risk in the future is that many businesses will be outstripped by more digitally-savvy rivals and find themselves at a significant competitive disadvantage. Over the coming years, UK businesses need to move quickly to digitally transform procurement and ensure they are not left behind.”

Digitalising processes still has a long way to go

While businesses recognise the need to digitally transform, the report found that on average, UK businesses have digitalised less than half (43%) of their procurement processes. The most digitalised tasks were transactional processes such as invoicing (55%), purchasing (42%) and budget management (33%). 

UK businesses have also failed to digitalise strategic processes such as spend analysis (32%) and risk management (26%). Identifying and bringing on new suppliers is also critical for businesses looking to identify new opportunities to collaborate and innovate, but worryingly, most businesses have not digitalised supplier onboarding (89%) or sourcing (84%) processes. When it comes to digitalising procurement and these processes, UK businesses face a number of challenges, with the most common obstacles to digital transformation being their suppliers (29%), their technology (20%) and their processes (18%). 

“Procurement has become a much more strategic part of every business, but a lack of digitalisation is preventing many teams from realising the potential value of their spend and suppliers. UK businesses need to take a smarter approach to procurement and move away from managing processes over email, phone, or paper, to instead capture everything digitally. This will help businesses identify opportunities to innovate, collaborate and grow revenues, giving them the chance to build better products and services that will differentiate them from the competition. Digitalising procurement creates an all-encompassing view for businesses, helping to create a competitive advantage that will see them soar past digital laggard competitors,” concludes Saric.

To download the full report, “Gaining the advantage in challenging times – why businesses need to digitally transform procurement now more than ever”, please visit: https://info.ivalua.com/uk/report-competitive-advantage

“…when you think about supplier diversity initiatives, small business procurement initiatives, it’s really about driving economic impact. And it’s really the small businesses that drive economic growth in any economy”.

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Rod Robinson is Vice President of Supplier Inclusion and Sustainability at Coupa, and the focus of that role, is to really drive inclusive procurement across the Coupa ecosystem, helping Coupa customers achieve, and even exceed, their supplier inclusion goals…
“…when you think about supplier diversity initiatives, small business procurement initiatives, it’s really about driving economic impact. And it’s really the small businesses that drive economic growth in any economy”.

A survey by researchers at WMG, University of Warwick saw 249 mid to large manufacturers from food and beverage to automotive, and pharmaceuticals to electronic equipment and more industries respond to the survey about their supply chain resilience in the current state and future potential…

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The COVID-19 pandemic has affected many people across the world, one particular way includes supply chains, some people found they couldn’t buy pasta or loo roll, and it was the same for manufacturers, who suddenly had to change their strategies to ensure their supply chain during the pandemic.

There have been many challenges in the past for the manufacturing supply chain, such as the 2001 recession, SARS, 2011 Tohoku earthquake, 2016 oil crisis, and Brexit. Although there have been other pandemics such as swine flu and Ebola, the COVID-19 pandemic was nothing the modern world had ever seen before.

A survey by researchers at WMG, University of Warwick saw 249 mid to large manufacturers from food and beverage to automotive, and pharmaceuticals to electronical equipment and more industries respond to the survey about their supply chain resilience in the current state and future potential.

They found several impacts from the COVID-19 pandemic, including:

· 58% of firms ae still experiences a decrease in demand 3 months post lockdown

· 66-73% of firms have been effective to responding to increases and decreases in demand

· Buffer management, multi-sourcing and visibility were favoured over agile production networks

· Cash management and securing supply were critical initial responses to the covid-19 crisis

· 84% of firms found their planning systems were effective, but still required human intervention

· The most apparent bottlenecks to their supply chain was people issues, such as warehouse staff being in quarantine at home

The researchers then assessed manufacturers supply chain resilience in three different times, business as normal, during COVID-19 and preparation for Brexit. For each time period they identified how 6 supply chain resilience practices that could be used proactively (pre-disruption), reactively (during and post disruption) or both. These included:

1. Supply chain planning – demand forecasting and contingency planning (Proactive)

2. Visibility – Having access to real time data (Proactive)

3. Collaboration – Working with SC partners to deliver customer value (Proactive & reactive)

4. Buffer management – Utilising inventory and production capacity to enable material flow (Proactive and reactive)

5. Flexibility – Establishing multiple sourcing options (Proactive and reactive)

6. Adaptability – Transforming the SC in responding to dynamic business environment (Reactive

In normal operation firms found their practices to generally be effective. However, there was opportunity for improvements in visibility and collaboration to support improved supply chain planning. Firms also said they have been effective in managing buffers in normal operation.

During the Covid-19 pandemic firms utilised supply chain planning as a response to the pandemic with effective planning systems reported by 84% of manufacturers. However, this still required a high degree of human intervention. Buffer management and flexibility were found to be less effective than in normal operations. The survey found that 55% of manufacturers used inventory as their primary buffer against disruption, with only 32% utilising flexibility within the agile production systems of suppliers. Inventory buffers whilst effective if the disruption creates an upturn in demand, can be catastrophic to cash flow if demand drops.

Similarly to COVID-19 when it comes to Brexit they’ve found that an increase in collaboration has led to improved supply chain visibility and planning. However, the uncertainty of Brexit is a cause for concern in terms of supply base flexibility with firms unsure of what type of response will be required.

Professor Jan Godsell from WMG, University of Warwick comments:
“It’s interesting to see that the lessons manufactures’ have learnt in developing supply chain resilience practices in response to COVID-19 pandemic are helping manufacturers to prepare for Brexit. However, the uncertainty of Brexit, particularly in terms of the impact of flow of material is challenging for developing supply base flexibility. Whilst manufacturers can proactively prepare for Brexit, a high degree of adaptability will be required to buffer against the unknown.

“All manufacturers should consider assessing their current level of supply chain resilience to identify the areas in which their current supply chain resilience practices could be developed. Working collaboratively with supply chain partners to improve supply chain visibility and planning are the key building blocks. More effective use of inventory and capacity buffers, and flexibility within the supply base can further improve resilience. Some disruptions cannot be predicted, and supply chains need to the capability to adapt.”

A shortage of digitally savvy talent, and a lack of training for technical and soft skills, hinder digital procurement initiatives

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Research from Ivalua, a leading provider of global spend management cloud solutions, has shown that a majority of UK businesses (86%) face significant barriers developing digital skills in procurement. The findings reveal that a shortage of digitally savvy talent (31%), a lack of training for technical and soft skills (28%) and a lack of understanding of the skills required (13%), are some of the main barriers preventing UK business from developing the digital skills they need. Additionally, over half (55%) of UK businesses say that digital skills in procurement are less advanced compared to other departments

The research, conducted by Vanson Bourne on behalf of Ivalua, surveyed 200 UK-based procurement, supply chain and finance professionals about the true nature of digital skills within procurement, and the challenges businesses looking to digitally transform will face. More than eight-in-ten (84%) UK businesses believe that the skill set required of procurement professionals has shifted from procurement-first to digital-first. The study also highlighted that most respondents believe that greater digitalisation (84%) and better digital skills (83%) in procurement would have enabled UK businesses to mitigate the impact of the COVID-19 outbreak more effectively.

“Over the last decade, the role of procurement has transformed from one of cost-cutter to a vital ally that can help inform and enable a business’s strategy. The global COVID-19 pandemic accelerated this trend even further, reinforcing the importance of procurement as businesses adapt to the new normal,” commented Alex Saric, smart procurement expert at Ivalua. “However, for too long, procurement has been seen as a digital laggard, with technology adoption trailing behind other departments. In order to keep its seat at the table in strategic discussions, procurement must ensure it has people with the right skills in-house, as well as easy to use technologies, or risk being unable to offer significant strategic value.” 

Challenges in hiring digital skills in procurement

As part of ongoing digital transformation efforts in procurement, the report found that UK businesses have started to introduce new technologies such as data analytics (55%), cloud-based platforms (53%), automation (35%) and AI/machine learning (30%) in the last 12 months. 

But when it comes to deploying these technologies, UK businesses are finding it difficult to complement them with the digital skills required. The study found that 88% find it challenging to hire the right digital skills to work with technologies such as AI, cloud-based platforms or data analytics, while 76% say they are concerned that existing procurement teams will struggle to work with new technologies. Developing digital skills is vital for businesses, as 91% of respondents say that improving digital skills can make procurement more strategic, while 94% say it will help them gain a competitive advantage.

“In a rapidly evolving business environment, digital skills are essential for procurement teams to analyse and mitigate risk, identify new opportunities and collaborate with suppliers. However, procurement teams are struggling to both attract digital talent and upskill existing teams, which puts them at risk of falling behind competitors, losing market share, and struggling to identify risk and opportunities ahead of time,” comments Saric.

“To address the digital skills gap in procurement, UK businesses need to ensure they are focusing on adopting tools that are easy to use and improve access to actionable insights. By making procurement smarter, businesses are giving teams the tools and skills needed to thrive in the new normal, allowing the business to react and proactively address the shifting sands of a post-COVID world.”

To download the full report, “Bridging the gap – how smart procurement technology can help companies overcome the digital skills shortage”, please visit: https://info.ivalua.com/uk/report-digital-skills

Mark Ellis, Managing Partner at 4C Associates, award-winning European procurement consultancy, on procurement’s role in transforming the way to post-Covid recovery.

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Over the past few months, how many times have you heard “we are living in unprecedented times” or “living in a different normality”? We are experiencing global factory labour shortages, supply chain disruptions due to travel and transport lockdowns, Force Majeure disagreements, suppliers running out of cash, realisation of our dependencies on global supply chains that we cannot control, disruption to ways of working due to lockdowns and the uncertainty over the length of current restrictions making effective forward planning extremely difficult.

Fortunately, for many, technology has enabled people to work from home and continue working and provide some normality to their day to day lives through the Covid-19 epidemic. However, even though many organisations have digitalised their customer front end services, sadly back office services have been woefully underinvested in (hardware, software and technology products) and many organisations have primarily spent time, effort and money to ensure that staff can continue to work during these difficult Covid-19 times by providing the tools and infrastructure to support home working.  

Supporting the global challenge

Over the last few months, procurement as a function has stepped up to support this global challenge. Not quite like the NHS, social care staff and the millions of health workers across the world, however they have listened to the ‘call to arms’ and mobilised their teams and their supply chains. On the other hand, unfortunately, many supply chains have failed, and business continuity plans have not delivered, as the procurement function has simply not been able to cope. This is after those organisations’ procurement functions invested heavily in sophisticated systems for tracking and managing their supply chain.

When Covid-19 hit, many UK based Utility organisations found out that their business continuity plans were not resilient against the unprecedented challenges it faced e.g. accommodation changes, systems switch over and consumer interface. Furthermore, many offshore BPO organisations struggled with home working due to bandwidth challenges of everyone on the internet and fitting for connection.  Whereas some ‘Challenger’ banks had invested in understanding and mapping their supply chains, and were able to instigate a quick and comprehensive review with their suppliers concerning financial viability, delivery capabilities and capacity during these challenging times.    

Did the technology fail or was it the ability of individuals and teams to take the data and make valuable insights to ensure they could deliver for their organisations? As a procurement professional, I am constantly reminded that data for data sake is not enough, you need to be able to use that valuable information to move the conversation forward, to support your organisation to innovate and, in the current crisis, to save lives.

As a function, we know that technology and understanding of the organisation’s needs is powerful and that we should utilise it to drive strong bonds with the individuals that work within our organisations and how this can deliver through our supply chains. Procurement technology combined with human knowledge is the mandatory combination to an effective classification and segmentation process and ensures businesses can quickly collate, visualise and action insights from existing data sources.

Connecting procurement technology and people

Connecting people and information guided by intelligent procurement systems can fundamentally change how companies buy and sell and can open broad visibility into the interconnected operations of buyers and suppliers. This also means reduced operational uncertainty as businesses can prevent bottlenecks in the supply chain before they arise. In the long term, it also enables procurement professionals to increasingly focus on strategic priorities as automated procurement solutions can take over their day-to-day tactical activities.

What these times are showing us is that we must do more to work on building better understanding of our own organisations’ demands, build sustainable relationships and appreciate new and innovative product and service development. It will make organisations stronger and ensure continuous service and reliability within the supply chain.

Now is the launch pad for great things for the procurement and supply chain function. We need to take the technology, data and insights to build strong and long-lasting relationships that can survive through the good and bad times.  We need to stress test our internal and external relationships and drive value and not cost, deliver new products and be the vanguard for change.

Ultimately, what Covid-19 is highlighting is the good that can be done, and we shine a light on the poor performances, poor process and inability to work collaboratively with people.  I sincerely hope that Covid-19 can make us stronger and build on some of the great and good that has been done over the past few months – as this proves we are all human.

Trying to keep pace with new technologies is one of the biggest challenges that most businesses are currently facing. Trends…

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Trying to keep pace with new technologies is one of the biggest challenges that most businesses are currently facing. Trends in digital transformation such as AI, the Internet of Things (IoT), 5G networks and the proliferation of chatbots are impacting businesses of all shapes and sizes. Even procurement, a department traditionally found knee deep in paper-based spread sheets and contracts is embracing these innovations and are using them to automate manual, laborious processes improve supplier relationships and improve transparency over organisational wide spend.  

So, as procurement takes advantage of the digital era, what’s likely to come next for the business function focused on delivering value and saving their organisations money? Will procurement finally get the business recognition it deserves? Here are my predictions on what’s to come for procurement:

  1. Quality data

Businesses are already making key decisions based on data analytics; however, data quality remains an ongoing challenge. In the future expect to see machine learning automatically cleanse data, ensuring that any errors or anomalies are corrected. For example, it will monitor and maintain supplier master data from contracts and the data used in pay runs.

  • Procurement to drive competitive business advantage

Thanks to new technologies providing greater business insights, procurement will have more influence than ever before on overall business strategy, growth and competitive advantage. Procurement teams will be required to move their focus from spend and cost control and focus more heavily on facilitating innovation, business agility and continuity of supply.

  • A move towards more agile procurement

Are we likely to see more departmental purchasing and procurement become a more centralised business function? I think so, and as a result we are likely to see better collaboration take place across the entire business. We could even see category managers become procurement specialists in their business units and build a network of gig workers to help satisfy their operational needs.

  • IoT, data and stock tracking

More and more businesses are likely to take advantage of IoT to enable ‘touchless’ procurement where stock levels can be monitored automatically. It can help businesses track items in their supply chain in real time and enable asset-intensive industries to link data across the business to their suppliers. Businesses will benefit from an enhanced data platform as it informs decision-making around spend and purchasing patterns, catalogue content, supplier portfolios and contract fulfilment.

  • RPA to go mainstream

Taking full advantage of Robotic Process Automation (RPA) procurement will be able to completely eradicate many of its day-to-day manual, high volume repetitive tasks. The procurement team can also say goodbye to hours spent compiling manual reports and instead use their valuable time more effectively and deliver real value to the business.

  • Improved insights into the potential for supplier risk

Procurement teams will have better insights than ever before into their suppliers thanks to a clearer understanding of data. Internal data compiled by procurement, supplier information, market and analyst data on supplier performance will be aggregated and analysed to deliver a true 360° view of supplier performance.

  • Procurement best practice to include Blockchain

We’ve seen Blockchain, the technology behind digital currencies starting to find its way into the procurement space over the past few years. I think in the future we’ll see it used selectively by procurement teams as it is expensive to develop and deploy. However, I think increasingly we’ll see it used in scenarios where there’s a need to track and trace to stop counterfeiting or a need for operational integrity.

Standard Chartered, a leading international banking group, and Infor, a global leader in business cloud software specialised by industry, today…

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Standard Chartered, a leading international banking group, and Infor, a global leader in business cloud software specialised by industry, today announced a strategic agreement to introduce the Infor Nexus network to the Bank’s clients. By digitizing the financial supply chain, businesses can minimize supply chain delays and friction, while suppliers can benefit from improved access to capital.

The Infor Nexus network transforms the traditionally manual process of data matching across multiple commercial documents including purchase orders, invoices and transport documents. This helps to speed up trade financing cycles, allowing suppliers to access capital faster and at more critical points in the transaction cycle, and as a result ensure on-time delivery of goods.

“Invoice approvals in a traditional non-automated environment often take weeks to complete, putting a squeeze on suppliers and bringing contention to the buyer-supplier relationship,” said Rod Johnson, General Manager and Head of Americas at Infor. “Slow invoice matching delays the trade financing cycle, preventing suppliers from obtaining capital they need to deliver quality and compliant goods on time.”

“While large corporates have achieved some level of automation through sophisticated enterprise resource planning systems, around 80 percent of data used in matching are sourced from documents residing with external parties,” said Michael Sugirin, Global Head of Open Account Trade Product Management, Standard Chartered. “This manual matching process is time-consuming, often resulting in a delay of the trade financing cycle which impacts the supplier’s ability to meet their working capital needs, most of whom tend to be small and medium-sized businesses. This strategic partnership addresses this gap and reduces capital related costs and risk from the supply chain.”

Through the strategic agreement, Standard Chartered will refer clients to Infor and its Infor Nexus network, based on specific needs, enabling them to benefit from automated matching and digitized documentation and processes delivered on Infor’s network of 65,000 businesses around the world. In addition to delivering broader financial services to clients, the Infor Nexus network provides global on-boarding and ongoing service and support to suppliers without requiring the involvement of the anchor buyer. The agreement also enables Standard Chartered to expand client relationships through digital transformation solutions that address sourcing and payables inefficiencies while enabling innovation and growth. 

Michael Sugirin added: “As our client’s trusted banking partner, our goal is to support them in their digitalisation journey through expediting their payables acceptance and facilitating export proceeds, and as a result improve their working capital cycles. We are excited to have this introduction agreement in place with Infor, whose platform offering not only fits well with our emerging markets footprint which generates significant trade documents flows, but also shares a similar commitment in supporting the development of sustainable, intelligent supply chains.”

By Daniel Ball, business development director, Wax Digital As a new year gets in full swing, there’s no better time…

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By Daniel Ball, business development director, Wax Digital

As a new year gets in full swing, there’s no better time for businesses to refine processes in need of improvement, and procurement shouldn’t underestimate the power of bolstering its own processes. Any attempts to make buying operations smoother, more efficient, and cost-effective are likely to play a part in wider business success.

When it comes to achieving personal goals, the key is to break it down into more manageable steps, and the same is true in business. Here are some targets procurement should set itself to get 2020 off to a blinder:

  • Get your contracts in order: The average organisation has 20,000-40,000 contracts, but what happens when the agreement needs to be reviewed or renewed quickly? How easy is it to obtain files regarding these arrangements as and when you need them? What’s more, businesses that are unaware of renewal dates or don’t have full visibility of supplier T&Cs risk putting themselves at serious financial and legal risk. Procurement teams should make a business case to introduce contract management software so that they have a single, secure portal that they can use to quickly access information such as expiry dates and service level agreements (SLAs). Not only that, the software will alert the procurement team when contracts are due for renewal, enabling the business to check if prices will go up and whether alternative suppliers should be found. The software is also crucial for verifying that contractors have the necessary certifications in place to ensure the business remains compliant.
  • Stop late payments: UK SMEs with late paying customers now have to wait on average 23 days to receive funds, doubling from early last year, according to finance company MarketFinance. The government is cracking down on late payments to SMEs, for example by empowering trade bodies to highlight organisations that are good or bad at paying promptly. To ensure invoices are paid on time, businesses should introduce a system, for example purchase-to-pay software; which automates the procurement process from ordering products or services through to making the payment.
  • Build better relationships with suppliers: Every procurement professional knows that supply chains can be complex and risky due to the uncertain economic landscape we currently operate in, particularly due to Brexit. That’s why it’s crucial to form close relationships with suppliers to mitigate the impact of unpredictable scenarios such as financial crises, weather disasters or political unrest. Using supplier relationship management software, the business will have a clearer view of the supply chain and is more likely to spot potential issues before they escalate into something catastrophic.
  • Bolster digital transformation programmes: Businesses will only reap the benefits of new procurement software if it’s underpinned by a clear digital transformation strategy. We surveyed 200 senior figures across many businesses and found that 72% of procurement professionals feel that the training they received after new technologies have been implemented was insufficient. Procurement should consult with senior managers and the IT department when new technology is introduced. They should work together to embrace the technology and ensure all users receive the training and guidance they need to use it effectively.

There is a lot of scope in procurement to take advantage of technologies that digitise laborious processes and increase visibility on costs and operations. With some clear goals that aim to improve different aspects of buying activities, businesses can make 2020 the year they free themselves from the shackles of paper-based spreadsheets and supplier contracts and use their time to add greater value to the business.

Eight out of ten procurement professionals claim that in the past decade, their role has changed because of new digital…

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Eight out of ten procurement professionals claim that in the past decade, their role has changed because of new digital transformation technologies implemented within their businesses.

Research from eProcurement specialists, Wax Digital, shows that 60% of respondents claim that technologies to automate slow and labour intensive processes has enabled them to be more productive in their job role. While less than a quarter (22%) said that it had made little difference to their overall efficiency.

Over half of procurement professionals (54%) claim that digital transformation has made improvements to their businesses by eradicating or streamlining traditionally manual processes. Just under a third (30%) of those surveyed are yet to experience any benefits or consequences from the implementation of digital technologies.

Nine out of ten respondents believe that there’s room for improvement when it comes to digital transformation projects within their industries. 40% suggested a need for digital experts to help their organisations deliver training, 26% would have preferred a longer roll out time for the technology and 18% thought better communication should have taken place while the technology was being introduced.

Daniel Ball, business development director at Wax Digital said: “Procurement professionals have seen significant changes in their job role over the past ten years due to the impact of digital transformative technologies. For example, many organisations, paper-based contracts, supplier records or even invoices have been digitised, saving businesses time and man-power resource and enabling all this information to be available at their fingertips.”

“In addition, supplier auctions and tenders are now also more automated than ever before – RFPs are sent out automatically while eAuctions allow procurement professionals to extract more savings within an automated auction setting to drive savings.

“With eProcurement tools generating more data than ever before, those working in the procurement industry have seen their roles become more strategic rather than just solely operational. These professionals are now required to have strong analytical skills, negotiation abilities and excellent stakeholder management”.

The full findings of the research can be found at: https://www.waxdigital.com/resources/digital-transformation-report

Heineken, the world’s most global brewer, has been working with JDA Software, Inc., for more than five years on its…

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Heineken, the world’s most global brewer, has been working with JDA Software, Inc., for more than five years on its large-scale cloud-based digital planning transformation. HEINEKEN has recently committed to extending its JDA footprint in specific geographies, which is already live in five operating countries (Italy, Netherlands, Spain, Poland and France). With a strategy to shift from a sales & operations planning (S&OP) model to an Integrated Business Planning (IBP) model, HEINEKEN is fundamentally upgrading the way it plans its business with JDA.

HEINEKEN is the world’s most international brewer, and the number one brewer in Europe, with operations in more than 70 markets globally. It is the leading developer and marketer of premium beer and cider brands. Led by the HEINEKEN® brand, the Group has a portfolio of more than 300 international, regional, local and specialty beers and ciders. They are committed to innovation, long-term brand investment, disciplined sales execution and focused cost management. Through “Brewing a Better World”, sustainability is embedded in the business and delivers value for all stakeholders.

“We have some of the most complex and volatile markets in the world and have been working with JDA to make faster, more well-informed decisions, which directly impact everyone in the value chain” said Joost Luijbregts, senior Director Global Customer Service / Logistics / Planning, HEINEKEN. “With JDA, we have taken big steps forward – fundamentally changing the way we plan our business in terms of S&OP and scenario planning. As our partnership with JDA continues to strengthen, I am looking forward to work with JDA on our journey towards IBP.”

HEINEKEN embarked on its strategy to shift from an S&OP approach to an IBP approach, uniting sales, marketing, finance, supply chain and procurement together to make well-informed decisions, and plan and forecast for the future. New scenario planning capabilities have allowed the business to make trade-offs on costs, margins and capacity. Since deploying this strategy across Europe, HEINEKEN has seen an increase in forecast accuracy, reduction in stock-outs and improved inventory turns and productivity.

Moving forward, HEINEKEN will bring the integrated JDA solution to most of its larger global locations, signifying the largest cloud-based solution at HEINEKEN. Going forward, HEINEKEN has its sights set up harnessing the power of artificial intelligence (AI) and machine learning (ML) with JDA, as it begins a pilot project using JDA Luminate Demand Edge.

“We’ve formed a strategic relationship with HEINEKEN with a foundation built on trust and openness, which is highly critical as we develop the next phase in their IBP roadmap,” said Johan Reventberg, president, EMEA, JDA. “With a clear roadmap for the future, HEINEKEN is well-positioned to continue driving a leadership position in the market, while delivering superior customer levels across all its 70+ markets.”

Almost three quarters (74%) of procurement professionals admit that their transition to eProcurement technologies could have been smoother if they’d…

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Almost three quarters (74%) of procurement professionals admit that their transition to eProcurement technologies could have been smoother if they’d had more support from a dedicated expert according to exclusive research from Wax Digital. 

The eProcurement specialists, surveyed over 200 senior professionals in IT, HR, Finance and Procurement and nearly half of the buying professionals quizzed believe that more training would have boosted their business’ digital transformation experience. And just over a quarter think it would have been better to introduce these new technologies over a longer period of time.

72% of procurement professionals have received either partial training or no training in new technologies after the digitisation of manual processes within their businesses. Yet, 28% said they have received enough training, with one in ten claiming that the process could not have been improved.

The study results also suggest that procurement’s roles and responsibilities have changed now they’re increasingly taking advantage of digital technologies. Eight out of ten procurement professionals claimed that new technology has changed their job role over the past decade. However, 60% believe that the adoption of digital technologies has increased their overall productivity.

88% of procurement professionals said that their company benchmarks either as average or below the industry standard for digital implementation. This viewpoint differs considerably from the responses from IT and finance as the research shows that they believe their businesses are meeting or exceeding standards.

Daniel Ball, business development director at Wax Digital, said: “It’s great to the see productivity gains being achieved by procurement through the adoption of digital technologies. Streamlining slow, laborious manual processes will simplify tasks such as invoicing, supplier sourcing and contract management; freeing up time for the team to work on other projects across the business.

“Any organisation going through the digital transformation process needs a dedicated expert on board to help champion all things digital in the business. Their role would be to support other employees as they get to grips with new technologies and help them to embrace the digital transformation process by offering first-hand experience and expertise, as well as coaching them on best practice. This approach can help organisations make the most of their new digital technologies and help ensure the transition is a success, improving productivity and efficiency across the organisation”.

Ivalua, a global leader in spend management, today announced the release of an enhanced third-party risk module, called Risk Center,…

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Ivalua, a global leader in spend management, today announced the release of an enhanced third-party risk module, called Risk Center, available as part of its latest product release. The latest innovations extend the existing strength of Ivalua’s Supplier Management solution, which had already been recognised as a Leader by Forrester Research Inc. in the most recent The Forrester Wave™: Supplier Risk And Performance Management (SRPM) Platforms, Q1 2018.

Ivalua’s Risk Center offers customers a holistic solution to actively monitor and mitigate third-party risk and compliance. Customers are able to consolidate real-time information spanning supplier performance evaluations, transactional data, spend data, contractual information and external risk information from major third-party data providers.  This combined picture is visible in actionable dashboards to provide a comprehensive and timely picture of risk and the potential impact on the business.

“Organisations are increasingly dependent on their suppliers, who can be sources of tremendous value but also increased risk,” said Pascal Bensoussan, Ivalua Chief Product Officer at Ivalua. “Ivalua’s Risk Center brings actionable data and insights from across the supplier lifecycle together with complimentary external data so our customers can effectively manage supplier risk. When combined with the extensive supplier collaboration capabilities embedded in Ivalua’s platform, our customers can unlock the full potential of their supply chains.”

Risk Center’s ability to integrate with third party data providers in real time allows it to meet the unique needs associated with various regulatory environments, industries, and customer compliance models, in an automated fashion. For example, Risk Center can aggregate data on supplier financial health, sustainability, adverse media, sanctions lists, supply chain disruptions and more. Ivalua maintains an open and rapidly expanding ecosystem, including new and updated out of the box integrations with leading providers such as:  EcoVadis – A long-time partner of Ivalua and leading provider of sustainability risk and performance ratings for global supply chains. Backed by a powerful technology platform, the industry’s most-trusted methodology and a global team of domain experts, EcoVadis sustainability scorecards provide insight and engagement tools to mitigate risk, drive improvements and create value across 198 purchasing categories globally.

EcoVadis – A long-time partner of Ivalua and leading provider of sustainability risk and performance ratings for global supply chains. Backed by a powerful technology platform, the industry’s most-trusted methodology and a global team of domain experts, EcoVadis sustainability scorecards provide insight and engagement tools to mitigate risk, drive improvements and create value across 198 purchasing categories globally.

“The global supply chain is a breeding ground for hidden sustainability and CSR risks. Our  partnership with Ivalua enables procurement to see where they are exposed and the steps they need to take to reduce their risk,” said Pierre-Francois Thaler, Co-CEO of EcoVadis. “The integration of EcoVadis Sustainability Ratings with Ivalua Risk Center brings our mutual customers a powerful combination of insights to optimise procurement decisions, improve supply chain performance and create value.”

  • riskmethods – A leader in supply chain risk management, riskmethods empowers businesses to identify, assess and mitigate supply chain risk. By using artificial intelligence, riskmethods helps customers automate and accelerate threat detection, enabling them to gain competitive advantage with a well-managed approach to meeting customer demands, protecting reputation and reducing total cost of risk.

“The integration of holistic supplier risk information within the Ivalua platform is a great opportunity for Ivalua customers,” says Heiko Schwarz, founder and managing director of riskmethods. “With riskmethods available via the Ivalua Risk Center, customers will be able to get a complete view of all types of risk, giving them the tools, they need to avoid the cost of disruptions and respond faster to risk events than their competition.”

  • Global Risk Management Solutions (GRMS) – In an upcoming release, GRMS, a recognised leader providing innovative supplier risk management solutions, will also be available. GRMS combines highly configurable software, premium data streams, and continuous human interventions to reduce exposure to global risk and liability.  GRMS delivers risk-management-as-an-integrated-service on fully private networks and serves clientele covering suppliers across more than 120 countries. 

By Joonas Jantunen, CEO Cloudia Middle East & Africa, Cloudia. Former Hewlett-Packard CEO, Lew Platt, once famously said: “If HP knew…

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By Joonas Jantunen, CEO Cloudia Middle East & Africa, Cloudia.

Former Hewlett-Packard CEO, Lew Platt, once famously said: “If HP knew what HP knows, we’d be three times more productive.”

Managing knowledge, or knowing what you know, and being able to apply it to core decision-making is key to business success now and in the future. In procurement, knowledge management already has the potential to drive productivity gains across the business. And emerging technologies like AI and RPA look set to play an outsized role.

What do we mean by knowledge management?

Every day, every moment, organisations and their operating environments are creating, using and sharing, huge amounts of information, or knowledge. Knowledge management, most simply put, refers to the process of collecting, maintaining and managing everything that a company ‘knows,’ in all its forms. But knowledge management is also about using that knowledge to help leaders make more informed decisions. In this article, we are considering knowledge management in this wider sense.

In any organisation, knowledge is power but only when it is well managed and usefully applied. In procurement, knowledge becomes power when it’s effectively managed for the purpose of driving decision-making. That means, identifying what information is critical to operations, analysing it, then sharing the findings with key decision-makers across the company.

What does this mean in practice for procurement?

In procurement today, knowledge management typically begins with process automation, aimed at reducing routine administrative work and freeing up procurement people to focus on innovation and productivity. Automation also equips organisations with the capacity to adapt and take advantage of new technologies as they develop. 

The vast majority of data management applications currently available focus on storing and presenting historical data – telling us ‘what happened’. Naturally, it’s important to know about past events to aid future management strategy, but all too often the data analysis and interpretation itself is left entirely to humans, with our limited capacity for processing large amounts of information. Also, it’s not possible to effectively exploit even the most basic historical data in practice unless the organisation’s procurement systems and processes have been digitised, and an adequate amount of historical data accumulated.

Emerging technologies assist knowledge management in multiple ways

When artificial intelligence (AI) is mentioned, often the first thing that comes to mind is robots making decisions on our behalf or undertaking roles previously performed by humans. Indeed, it has been predicted that robots are likely to replace many service-sector jobs, among other things. However, it’s worth remembering that predictions are based on assumptions of what might happen in terms of advances in AI and it’s challenging to predict the pace at which these advances would take place.  

In the short term, the situation looks less exciting. At the moment, the most significant strength of AI is its ability to handle huge amounts of data from various sources and to establish links among different factors. Another remarkable aspect of AI is the speed at which it is able to identify and produce text, sound and image. As it stands, AI is best suited for optimising existing processes and behavioural models on which an organisation already has plenty of high-quality data.  

AI helps manage, cultivate and discover procurement knowledge

AI and its various applications, especially robotic process automation (RPA), can significantly speed up data collection and assembly. In addition to the information that’s entered into the system and generated during the daily procurement activities, RPA is also able to cultivate new information. Useful information can be gathered about various relevant factors, such as the market, operating environments, pricing, currency fluctuations, any changes to contracts or suppliers, as well as other operators or events within the same business sector.

With the help of automation, the data can be assembled, categorised according to context, and merged and stored without human interference.  As a result, the process of data discovery will be significantly quicker and more straightforward. Technology can also be harnessed to keep different levels of management up-to-date with the latest information regarding, for example, various organisational units, or changes to contracts or consignments. As a result, management will always have access to real-time knowledge of any breaches of contract or disruptions in the supply chain. 

Diagnostic analytics explains why something happened

The next level of knowledge management is reached when technology is exploited to help understand the causes of events and certain behaviours. Diagnostic analytics examines data or content to answer the question ‘Why did this happen?’. When there is a better understanding of what happened, information can be used to find and detect a variety of recurring formulas and patterns, which help control and redirect operations more accurately.

For example, if the same suppliers always succeed or fail to fulfil the terms and conditions of specific product categories, the valuable information provided by diagnostic analytics can help target investment toward the most reliable suppliers. Similarly, understanding the changes in supply and demand, under certain conditions in different product categories, will help schedule the procurement process more efficiently. Diverse procurement procedures and market fluctuations have an impact on the price level of bids, but by analysing trends and past events, it is possible to get both the procedure and the timing right.

Predictive analytics explains whats going to happen

Any organisation wishing to succeed needs to have foresight. Predictive analytics is a level up from analysing the past, as the focus is on developing and automating forecasts and probabilities based on current events. Those in charge of procurement can use the knowledge to predict and prepare for various outcomes and direct their actions accordingly. 

Once the analytics has discovered why something happened, it will be able to draw conclusions and predictions about what is going to happen next. As an example, it’s possible to predict that when certain changes occur on the market, certain suppliers will perform better (or worse) in relation to certain contractual terms, or if the price or availability of a certain product category is projected to reduce.

Prescriptive analytics explains what should be happening

A high level of procurement knowledge management is achieved when technology can be employed to tell what should be done next. AI and its various applications can efficiently simulate human behaviour and learn to make draft measures and proposals based on predictions. Even the decision-making process can be fully automated with the help of various approval stages.

Based on facts and probability-weighted projections, the system can give recommendations to management about different areas of procurement. For example, it might be advised to avoid certain suppliers at certain times of the year due to projected shortages in supply, or to order extra goods in advance to prevent stock from being exhausted.

Choose an experienced and competent partner

AI is a very useful tool for optimising performance and streamlining processes where the cost of human error can be high. In order to make the best use of technology in procurement knowledge management, it’s essential to be able to identify and collect the type of data that matters most to your organisation. Since the projections and recommendations are based on existing data, the sooner the process of data collection and storage in your organisation commences, the better.

With constant innovation and marketplaces changing faster than ever before, procurement is undergoing its own transformation. Increasingly, companies are looking…

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With constant innovation and marketplaces changing faster than ever before, procurement is undergoing its own transformation. Increasingly, companies are looking to support faster, decentralised procurement functions that will in turn allow for decentralised decision making. Here we look at 5 key shifts in procurement for 2020, as detailed by Gartner.

Value Drivers: From risk mitigation to leveraging knowledge

Businesses have been investing in new technologies in order to better understand their operations. Data capture and analytics have allowed companies to make informed business decisions, based on insights from data analysis. In recent years, the focus of this analysis has been on risk mitigation and cost reduction. Over the next year, business will begin to leverage the knowledge it has gained on spend, suppliers and markets in order to better identify new sources of value and eliminate inefficiencies.

 The role of procurement: transactional to strategic

The very perspective of procurement has changed radically over the last decade. Companies have almost begun ‘waking up’ to the notion that procurement is no longer a simple cost centre and in recent years, more and more of them have placed procurement at the heart of their operations. Over the next year, procurement will continue this evolutionary journey as businesses will shift it further, taking on more high-value work and focusing more and more on ‘top-tier’ buys. This will see experienced category managers spending more time developing category managers throughout the business, with the skillsets changing to include process expertise and coaching others.

 Business role: business partners enter the game

With the role of procurement becoming increasingly strategic, the lines between traditional procurement professionals and separate business units are blurring. More and more business units are aligning to the procurement function, taking on more responsibility and combining their specific expertise with that of the procurement role. As a result of this, procurement will enhance its training and coaching capabilities to help ease business partners into a position where they can source on their own. New tools and processes will be defined in order for business partners to execute sourcing events independently and mechanisms will be put in place for evaluating sourcing discipline executed by the business.

Delivery model: a centre of excellence

The very model of procurement will change, shifting towards a model defined by a CPO, Category Manager and Procurement process experts. What this ultimately means is that experienced procurement managers will conduct the most important purchases/buys and the procurement process experts will provide guidance to the business units. Overall, procurement will develop a better understanding of the varying levels of business partner sourcing discipline, meaning that the overall team will focus on process excellence and less on specific category knowledge.

Resources:  investing in people and technology

Investing in people, skillsets and talent is nothing new, but the way in which procurement will invest in its people and its technology will change. Reallocating budgets from outsourcing and corporate overhead will see procurement look towards professional and analytics skillsets. Technology investment on the other hand will shift to include robotic process automation software and customer experience technology. This will see greater use of customer experience experts and an increase in professional advisory skill sets.

Listen to the podcast here! In the latest episode of The Digital Insight, George Booth, Chief Procurement Officer at Lloyds…

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Listen to the podcast here!

In the latest episode of The Digital Insight, George Booth, Chief Procurement Officer at Lloyds Banking Group explores risk assurance and whether it’s become a top priority for the CPO of today. 

George also talks about how big data, AI, and blockchain are redefining the sourcing function and in turn, redefining the role of the procurement professional. We also discuss how, in the digital age, balancing the need to identify and onboard new fintechs with a need to protect the business from inherent risks cause significant challenges, but also opportunity.

Read the latest issue here! This month’s exclusive cover story features an interview with Joseph Lee, Vice President of Procurement…

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Read the latest issue here!

This month’s exclusive cover story features an interview with Joseph Lee, Vice President of Procurement and Subcontracts at AECOM Management Services, who tells us how the company optimises its procurement to become a strategic sourcing organisation.

Lee leads all procurement and subcontracting for AECOM’s Management Services Group — an organisation with more than US$4 billion in annual revenue and operations in more than 25 countries. Joining the business in early 2017, Lee was tasked with creating a plan to transform the procurement organisation and to assess it in its existing format. Here, he found that procurement was still viewed as something of a cost centre.

“They received requirements and executed them. That was it,” he explains. “There was little value-add; no metric, performance or accountability to the team. After assessing, I recommended we stand up a strategic organisation; one more forward-leaning that could negotiate long-term agreements in order to create efficiencies in our transactions…”

We also feature an incredible article with Maytham Al-Khairulla, VP of Business Support at OSN, while negotiation techniques in procurement are discussed by Eman Abouzeid, Global Procurement and Supply Chain Professional.

Enjoy the issue!

With constant innovation and marketplaces changing faster than ever before, procurement is undergoing its own transformation. Increasingly, companies are looking…

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With constant innovation and marketplaces changing faster than ever before, procurement is undergoing its own transformation. Increasingly, companies are looking to support faster, decentralised procurement functions that will in turn allow for decentralised decision making. Here we look at 5 key shifts in procurement for 2020, as detailed by Gartner

Value Drivers: From risk mitigation to leveraging knowledge

Businesses have been investing in new technologies in order to better understand their operations. Data capture and analytics have allowed companies to make informed business decisions, based on insights from data analysis. In recent years, the focus of this analysis has been on risk mitigation and cost reduction. Over the next year, business will begin to leverage the knowledge it has gained on spend, suppliers and markets in order to better identify new sources of value and eliminate inefficiencies.

 The role of procurement: transactional to strategic

The very perspective of procurement has changed radically over the last decade. Companies have almost begun ‘waking up’ to the notion that procurement is no longer a simple cost centre and in recent years, more and more of them have placed procurement at the heart of their operations. Over the next year, procurement will continue this evolutionary journey as businesses will shift it further, taking on more high-value work and focusing more and more on ‘top-tier’ buys. This will see experienced category managers spending more time developing category managers throughout the business, with the skillsets changing to include process expertise and coaching others.

 Business role: business partners enter the game

With the role of procurement becoming increasingly strategic, the lines between traditional procurement professionals and separate business units are blurring. More and more business units are aligning to the procurement function, taking on more responsibility and combining their specific expertise with that of the procurement role. As a result of this, procurement will enhance its training and coaching capabilities to help ease business partners into a position where they can source on their own. New tools and processes will be defined in order for business partners to execute sourcing events independently and mechanisms will be put in place for evaluating sourcing discipline executed by the business.

Delivery model: a centre of excellence

The very model of procurement will change, shifting towards a model defined by a CPO, Category Manager and Procurement process experts. What this ultimately means is that experienced procurement managers will conduct the most important purchases/buys and the procurement process experts will provide guidance to the business units. Overall, procurement will develop a better understanding of the varying levels of business partner sourcing discipline, meaning that the overall team will focus on process excellence and less on specific category knowledge.

Resources:  investing in people and technology

Investing in people, skillsets and talent is nothing new, but the way in which procurement will invest in its people and its technology will change. Reallocating budgets from outsourcing and corporate overhead will see procurement look towards professional and analytics skillsets. Technology investment on the other hand will shift to include robotic process automation software and customer experience technology. This will see greater use of customer experience experts and an increase in professional advisory skill sets.

By Dale Benton In a world awash with digital transformation stories that see companies restructuring or even dispensing with old…

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By Dale Benton

In a world awash with digital transformation stories that see companies restructuring or even dispensing with old business models to usher in the new era of digitalisation, the notion of understanding and sifting through noise in the marketplace, in order to head down the right path, requires a level of expertise that even some of the world’s leading organisations do not possess. This is why they turn to consultancies such as Roland Berger. With more than 2,400 employees working across 35 countries around the world, Roland Berger is a consulting partner of choice because it boasts a deep understanding of diverse cultures and markets.

One such industry space known for its ever-changing complexity amid a radical transformation the world over, is procurement. Michael Pleuger, Senior Partner at Roland Berger is an experienced procurement professional, focusing on large scale procurement and supply chain transformation programs. Having spent his entire professional life working in the business transformation space, he has seen first-hand the shifting nature of procurement and more importantly, the shifting perspective of organisations. Getting his start in the industry as Head of Procurement in a German M-DAX listed rail technology company, Pleuger soon found himself working on a major supply chain transformation program. Here, he worked closely with a number of different consultants, looking at technology implementation and change management. His consultants convinced him to move to the other side and to advise other clients as a management consultant himself. In this new consulting role, Pleuger delivered global procurement transformation programs for large European Blue Chips.

Later Pleuger joined Vodafone to bring in his experience to help integrate their global procurement activities and to establish a corporate procurement in the telco’s HQ in Newbury, UK and subsequently in the Vodafone Procurement Company in Luxemburg. After an almost four year stint in Vodafone, Pleuger returned to Berlin and to the consulting industry. He continued to serve globally-leading companies to transform their procurement and supply chain functions into a competitive differentiator. In this role he returned to Vodafone as a consultant and it was this time with the company that opened his eyes to a new wave of digital transformation in procurement.

“I was asked to look at digitalisation within the procurement company and it was, in my humble opinion, that the company was already fully digital because they were already working with new technologies in sourcing, P2P, invoicing,  contract management, supplier collaboration and supplier performance management,” he says. “With this large existing digital footprint in place, we looked at it differently together with our client and saw that through RPA for example, a lot of P2P suites and e-sourcing suites would be potentially fully automated and therefore eliminated.” Pleuger identified that procurement needed to take on a new role in the future; a move determined by the unique positioning of procurement. As the function with the most interfaces, both internally and externally with the supply base, procurement is the ‘spider in the web’. All the data coming from all the nodes within the network, pass through procurement, presenting a unique opportunity for procurement to become the primary provider for business insight and foresight. It requires procurement to being able to make meaningful information out of this avalanche of data.

“This is a completely new currency of procurement, from savings to business to business intelligence,” explains Pleuger. “Today, as a senior partner with Roland Berger, my role is working with leading procurement organisations to help them prepare for the future of procurement.” To achieve this, Roland Berger uses a framework,  they have branded “the procurement endgame”. The procurement endgame describes how certain mega trends, one of the biggest being digital innovation and  industry specific disruptors, are turning companies and procurement upside down. Pleuger cites the emergence of 5G technology and how it’s enabling industry 4.0 and the Internet of Things a disruptor in the telco industry. In the automotive space, the emergence of autonomous driving is clearly a disruptor.

“What we see is that our clients respond to these external challenges by defining a new corporate strategy and business model,” he says. “Procurement aligns with these new business models and is key to operationalising these by providing business insight and foresight. Procurement is buying different content, such as digital content but also needs to buy differently, e.g. in collaboration with start-ups or emerging eco-systems.”

As the spider in the web, procurement has a responsibility like no other business unit. It has to be able to break down the complexity of its function and communicate it to the wider organisation in a language that makes sense. For some, the perspective remains that procurement is simply writing purchase orders and signing off invoices, but this is shifting and new business models are now opening the doorway to new capabilities. “In order to fulfill its role, procurement has to have connectivity to all the nodes in the network. Behind the digital glue, however, is collaboration,” he says. “That digital glue is an intuitive collaborative workflow, one that brings everybody into this flow of analysing the internal demands, the external market and then developing a strategic response in the shape of a better procurement strategy or category strategy.”

As an example, Pleuger looks at artificial intelligence and its role within procurement. “If all the IOT devices and the industry 4.0 devices and the consumers online around the world are connected and capturing data and feeding it into the procurement sweet spot, that’s going to overwhelm the category managers,” he explains. “So, we look to feed AI into managing that data as it comes their way. Then, they can use this AI to prioritise, digest and summarise all of the sources available and provide an executive summary and predictions that can be used to stay ahead of the game. This is but one example of the capabilities that the category managers require in order to succeed in procurement today.”

The key component in the middle of transformation is the procurement professional and the category managers that are shifting their way of working in this new era of procurement. In order for organisations to embrace innovation, implement new digital tools and unlock greater value, the people controlling and accessing this digital glue need training to join these journeys. Roland Berger has recently released a white paper on 21st century skills in procurement, which breaks this down into two dimensions; the need for collaboration and the complexity of the task at hand.

“If the complexity and collaboration is low, then this is a task that can be automated and it requires a basic understanding of what the digital tools can do,” explains Pleuger. “If the complexity is high, but the collaboration is low, something like AI can be used to analyse that complexity and solve the problem. However, if the complexity is high and the collaboration is high, this is where we look at human intelligence and our best people. Very often I hear up-skilling is a shift from lower value tasks to higher value ones and this is correct. But I think that, unfortunately, due to it being a hard discussion, we will lose people along the way. Automation for example could reduce the overall demand for procurement professionals. It’s too hard a discussion to simply say up-skilling organisations need to break down exactly what these digital tools will bring and takeaway.”

The challenge Pleuger sees here is one that stems from something he experienced himself; what does digitalisation mean to people? This is a question that Pleuger loves to work with organisations to try and answer. Pleuger, through his career, has learned that digitalisation is different from implementing standard IT software packages, for it opens the door to innovation. “If digitalisation means what we always associate it with, being agile and disruptive, then this in itself determines that it cannot be a standard software bought from the shelf,” he says. “If you want to be super disruptive, you have to invent something completely new. You have to be bold and adopt a failing forward attitude.” He points to a quote that states that all experts are experts in what was, no one is an expert in what will be. “If you want to be an expert in these innovative technologies and digitalisation then there are three things that must replace experience: vision, leadership and collaboration,” he says. In order to achieve this, an entrepreneurial, agile and creative environment is key.

Roland Berger’s Spielfeld, located in Berlin, is such an environment. over recent years, the former mail sorting office in the central Berlin neighbourhood of Kreuzberg has been transformed into ‘Spielfeld Digital Hub’. The three-storey hub comprises 2,500 square metres of workspaces, meeting rooms, technology areas and kitchens. It is a breeding ground for collaboration, brainstorming and innovation between people from companies of all shapes and sizes, from start-ups to corporates. Spielfeld Digital Hub was founded by consultancy firm Roland Berger in conjunction with Visa. “It’s a place where tech firms, start-ups and venture capitalists come together,” explains Pleuger. “They form an ecosystem in which teams of people from different disciplines and different organisations can innovate together and where their innovations have the chance to mature. “This is the new way of working,” says Pleuger. “In an environment like our Spielfeld we can find out together with our eco-system partners what it means to collaborate in the very spirit of vision, leadership and collaboration. It will ultimately lead to innovation, as it did when Pleuger and his team have spearheaded the digitalisation of category management and thus addressed a white space in the landscape of digital procurement systems and tools. A ground-breaking innovation.

Trying to determine what digitalisation means to each and every one of us links back to Roland Berger’s concept of procurement endgame, a series of frameworks that prepare organisations for the future, whatever it might look like. The Endgame is built around an organisation’s strategic response to industry trends and industry specific disruptors and how that in turn defines new requirements for procurement. The challenge is, and ultimately always will be, navigating this future in a way that will achieve success. Pleuger points back to the idea of failing forward, being bold and collaborating. “I look at the quote again around no experts in what will be. This means that we don’t need to look at people who have done this for 10 or 20 years. We can look at young, fresh and driven individuals,” he says. “Develop these young and hungry individuals and they can bring a massive impact and change into the way procurement works. This can help create a culture that will truly enable digital transformation for any organisation.”

By Daniel Ball, business development director at waxdigital.com Ever heard the joke that the only way to be popular in…

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By Daniel Ball, business development director at waxdigital.com

Ever heard the joke that the only way to be popular in procurement is to buy a dog and take it in to work? Well, times are changing, and procurement’s popularity is on the ascent as it is recognised for its positive contribution to both the environment and society. Many of today’s savvy procurement professionals realise the advantages of adopting new approaches to how they buy goods and services.

Once perceived as the team that simply saves the business’ money, procurement’s role is changing, as both sustainable and ethical purchasing practices increasingly become business priorities.

Legislation such at the UK Climate Change Bill is forcing procurement to address environmental issues such as plastic reduction and biodiversity. And, more and more customers are now making their buying decisions based on their suppliers’ sustainability credentials.

While sustainable procurement can make a big contribution to an organisation’s Corporate Social Responsibility (CSR) efforts, some businesses are making change of a different kind through their purchasing.

Ethical sourcing is a way for organisations to make positive societal change by choosing to buy from social enterprises which support those most marginalised from the workforce. According to Social Enterprise UK there are over 100,000 social enterprises in the UK. They employ two million people, contribute £60 billion to our economy and offer their services across most sectors. Just like traditional businesses, social enterprises work to make a profit but use it to help create positive social change for those most in need of support.

As well as contributing to good causes, engaging with social enterprises can also have a positive impact on the external and internal perception of a company. According to an Ipsos Mori poll, 84% of consumers believe that companies should do more for society. And, working with social enterprises can have a positive impact on staff morale too with 75% of millennials claiming they would agree to a pay cut to work for a more socially responsible company.

From bathroom soap to recruitment services, the UK’s social enterprises are well-equipped to support numerous business needs. Here are a few examples of social enterprises supplying to businesses throughout the UK:

Soap Co. is an ethical brand that creates cruelty-free body care products, including soap for office washrooms. It provides training and work opportunities for people who are visually impaired, or with other disabilities.

Graduate Planet, is a recruitment business which reinvests it profits into local environmental initiatives. 

Auticon is a national IT consultancy exclusively employing autistic adults as IT consultants.

Recycling Lives is recycling and waste management company that supports charity programmes for ex-offenders.

Working with social enterprises can sometimes be as easy as changing office supplies provider. Another business dedicated to changing lives, is WildHearts Group, a leading UK B2B social enterprise. It encourages businesses to make a positive social impact simply by coming to them for office supplies. Providing 35,000 everyday products that businesses need to buy anyway at competitive prices, its profits help funds the work of the WildHearts Foundation who support struggling female entrepreneurs in Africa and young people affected by social immobility in the UK. 

One CPO who works with the WildHearts Group, told us about the impact this approach to procurement is having on the organisation: “Social enterprises have revolutionised the scale of conversations procurement now has with key stakeholders in the business.

“We’ve found an effective way of making people feel good about procurement. We now have case studies demonstrating how we are contributing – for example, we’ve helped a Ugandan mother set up her own business. Borrowing just £40 enabled her to set up her own fruit and vegetable stall.  It’s no longer a conversation about a ream of paper but one about helping someone educate their kids. What’s not to like about that?”

As well as helping facilitate social mobility, there are many more benefits this ethical approach to procurement can bring to the business. Working with social enterprises doesn’t have to mean compromising on cost or quality, with many suppliers credited for their excellent customer service, competitive pricing, and innovative products and services. 

Crucially, it’s also becoming increasingly common for customers to only want to work with businesses who support social enterprises. WildHearts Group say  they often see organisations highlight their association with them in tenders to help them win the business.

Both sustainable and ethical procurement practices not only deliver both environmental and societal benefits but contribute to the success and motivation of the wider business too. But don’t underestimate the impact these approaches to purchasing can have on the procurement team too.

Another CPO told us that he’d met more senior managers at his business through working with social enterprises than he ever would have done so previously. Perhaps now CPOs can raise their profiles without having to buy a dog after all.

Our exclusive cover story this month features a procurement transformation at Aldar Properties, one of Abu Dhabi’s leading property developers….

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Our exclusive cover story this month features a procurement transformation at Aldar Properties, one of Abu Dhabi’s leading property developers. We caught up with Musbah Abu Jarad, Senior Vice President of Corporate and Assets Management Procurement to explore how Aldar Properties utilises procurement excellence.

Read the issue here!

Abu Jarad joined the business in late 2018 and did so at a time of procurement transformation for Aldar. “The procurement function within the company has evolved at Aldar from a cost function into a partnership function,” he says. “What this means is that we no longer look at suppliers as just suppliers to come in and provide services or goods and then leave. We look at them as partners, and ones who share our same environmental responsibility.” Over the last year, Aldar has invested significantly into its procurement function to define a clear strategic function.

Elsewhere, we have a revealing interview with Sammeli Sammalkorpi, the co-founder of Sievo, the world’s leading company focused on procurement analytics, exploring how it achieves this through AI and a client-focused approach.

Plus, features on ethical procurement, AI as utilised by CPOs and a supply chain masterclass with Gartner’s Frank Vorrath. And… our essential guide to all the best conferences and events from around the globe.

I hope you enjoy the issue!

Andrew Woods

By Alex Saric, smart procurement expert at Ivalua Organisations are under more pressure than ever before to innovate at speed,…

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By Alex Saric, smart procurement expert at Ivalua

Organisations are under more pressure than ever before to innovate at speed, ensuring they remain relevant in an increasingly competitive business environment. However, one of the barriers to achieving this is the constant drive to cut costs.

In today’s procurement landscape, cost reduction and innovation can no longer be viewed as mutually exclusive. Instead of focusing solely on remaining profitable, organisations need to view cost reduction as a sustainable practice that doesn’t block innovation. This misalignment between objectives means organisations must take more consideration when it comes to supplier management and adopt a more collaborative approach, investing in the right tools to help ensure innovation isn’t stifled by an overarching focus on cost reduction.

Innovation has become a top priority for organisations, but in order to deliver ground-breaking new developments, they must take steps to ensure they have effective supplier management that encourages and enables innovation.

Tapping into supply chain innovation

Suppliers should be a key resource for organisations looking to develop innovative ideas. According to the Institute for Supply Management (ISM), up to 65% of organisational innovation is sourced externally through various partners and suppliers. This means, in order to increase innovation, organisations need to better understand their supplier capabilities by tapping into the skills and knowledge base which will help to drive the business forward.

Despite organisations having access to this supplier information, many don’t use it. In fact, most organisations typically don’t get out enough to explore new ideas from their suppliers. They would much rather keep the innovation and creative thinking in-house with the marketing or planning department. Capgemini research on Supply Relationship Management reveals 60% of procurement departments do not interact with their suppliers through any source of social medium. This signifies a considerable amount of potential for growth and shows that resource is going to waste.

The report also found a severe lack of supplier relationships within organisations, with only 16% of Capgemini’s respondents having a corporate strategy and process in place to manage supplier relations. These organisations are failing to utilise the knowledge of their suppliers, resulting in missed opportunities to discuss new strategies or possible product ideas.

Lack of scalability limiting collaboration

The barrier to working alongside suppliers and putting processes in place is often due to a lack of scalability, with too many organisations collaborating via email or verbally with a handful of existing, strategic suppliers. By digitising supplier engagement, collaboration can scale across more suppliers and products for greater overall benefit. Poor technology adoption is a common barrier. Forrester research previously found that over three-quarters (82%) of organisations switched or are considering switching technology providers due to poor level of supplier onboarding (30%) and poor user adoption (27%). This has prevented suppliers from easily communicating with procurement teams or even bidding for contracts.

It is impossible to unlock innovation if the means are not provided to help suppliers get involved with innovation initiatives or suggest ways to sustainably cut costs or improve designs.

Currently, there are organisations that use recognition and collaboration to develop highly effective supplier relation programmes. General Motors (GM) are known forfrequently praising suppliers who have excelled or have a successful collaboration with GM to produce innovative technologies through their supplier programme. This system has helped GM to promote innovation and incentivise suppliers so they can feel rewarded and motivated to share their latest ideas and breakthrough technologies. Organisations that have a supplier relationship management programme in place are able to efficiently measure target outcomes, which promotes continuous improvement in collaboration with their suppliers.

Building a supplier ecosystem to foster innovation

In order to strike a fair balance between cost savings and other objectives such as sustainability and new product development, organisations need to move away from their cost-focused approaches and must instead adopt an entirely new way of managing their suppliers. It’s time for a more measured approach to supplier management, one that will help enterprises focus on diversity and innovation, and which will ultimately encourage sustainable cost savings driven by the supplier rather than the buyer.

However, this will be impossible to achieve without a reliable data foundation, to help organisations make accurate and informed decisions and weigh up their options effectively and accurately. By implementing smart procurement technology to clean up supplier data from multiple sources, organisations can gain 360-degree visibility across the entire supplier base. This will help to unlock a wealth of insights into contracts, orders, and invoices, as well as detailed information on suppliers such as risk factors, relationships and performance evaluation.

Organisations under pressure to innovate at speed can utilise this visibility to build deeper, more meaningful relationships with suppliers, allowing them to collaborate to create sustainable cost savings while also creating new products and services to satiate demand. As the speed of innovation increases in the future, savvy organisations must ensure that conversations about cost don’t become a barrier; otherwise, they risk more savvy rivals utilising their supply chain to rapidly deliver new products to market, leaving those that don’t in their wake.

Tradeshift co-founder Gert Sylvest, and CPO Roy Anderson, reveal how their global open business platform is transforming the future for…

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Tradeshift co-founder Gert Sylvest, and CPO Roy Anderson, reveal how their global open business platform is transforming the future for buyers and sellers. By Elliot Francis

Tradeshift was founded in Denmark in 2010 by Gert Sylvest, Mikkel Hippe Brun and Christian Lanng. The trio’s ambition was to connect organisations across the world with an open business platform capable of transforming the way buyers and sellers interact by digitising and connecting every process. With over 800 staff based in 13 countries worldwide, Tradeshift helps businesses connect with all their suppliers digitally; remove paper and manual processes across procure-to-pay; seize early payment discounts to save money and buy what they need while managing supplier risk.

Sylvest’s vision is clear: “Marrying social technology with hard transactions will change the way the world thinks about business and finance, and allow us to bridge major digital divides.”

The Tradeshift Platform

Our platform allows you to run applications to meet the needs of what you’re doing when you’re doing it,” explains Tradeshift’s CPO Roy Anderson. “Different roles, such as advertising, legal services, facilities or engineering, have different requirements, requisitioning means and connections to their suppliers. They want a system that works for them. Tradeshift creates a user centric model – versus a procurement centric or IT centric model – providing different tools for different skillsets.” Tradeshift’s platform can connect the dots digitally offering a breakthrough in use-ability. “The key element of procurement is penetration,” he adds. “Getting all of your customers on board is a lot easier with this user centric tool.”

Anderson’s career path included the role of CPO at MetLife where he managed close to 20,000 suppliers. With just a few hundred of those automated, his resources were tied to managing the risks and costs of unconnected services tied to an IT-centric model. Today, he identifies three areas where Tradeshift can drive transformation in procurement… The aforementioned deep penetration of connectivity with suppliers digitises the supplier base. Secondly, the platform allows for user centric applications. With the penetration and platform established the third key benefit for users is access to a growing marketplace of products and services. “It becomes something that can work for a CPO very effectively,” he maintains. “You can tie into the Tradeshift marketplace and be able to buy your product at your price, and use the services without having to do the enormous work of setting up and running through the business case and the IT resource plan and the implementation efforts.”

Innovation

Since 2010 Tradeshift has been targeting the Fortune 5000 companies and branching out to cover the whole Source-to-Pay cycle, moving inside organisations and onboarding employees for accounts payable automation, and increasingly for procurement alongside services offered via the marketplace. This innovation has helped define the company’s strategy on AI, blockchain and IoT. “We started to implement Machine Learning and AI back in 2012 and created CloudScan, an industry first scan and capture for the accounts payable process. What differentiates those who profit from Machine Learning is the ability to solve the network layers. Being a cloud-based network platform, we have the ability to learn from both the individual company’s best practice – procurement, invoice approvals, product classification – and how it works across the network. This has helped us develop automatic invoice coding and approvals based on existing patterns.”

Challenges

“It’s always an educative journey,” believes Sylvest. “We’ve been approaching things from a new angle since we went 100% network first in the cloud. Customers that are successful on our platform buy into the bigger vision… When we use apps on a phone, everything is connected by default. Companies get that. After 40 years there is only one way to go, greater digitisation of the supply chain and the collaboration between companies. The challenge for them is to embrace ways of breaking down data silos to leverage the benefits of AI. Big players like Google and Facebook are driving this and putting out their technology as open source and using engineering communities to develop this at breakneck speed. The issue lies in how you adapt and use the technology, so most enterprises today are embarking on that learning process to make sure they reap the benefits.”

Automatic success

The automation of e-invoicing has been a resounding success for the company. Tradeshift Pay is now utilised globally by hundreds of businesses and was recognised in the Gartner Magic Quadrant for Procure-to-Pay Suites in 2018. “Tradeshift’s model is to do digital by default,” confirms Anderson. “We work with suppliers to be able to get their documents digitally ripped to start, moving away from paper that needs to be scanned. It’s always going to be a tailored activity, but ultimately suppliers can see that by embracing a digital network, accurate invoices make for accurate payments. Finance teams can manage their working capital more efficiently, suppliers can be paid faster while cash be used more effectively…” Anderson reckons what’s good for the supplier is good for the client. “This is an enormous value proposition to many of our customers,” he adds. “The next step is to digitise the front end – the sourcing of the data analysis and spend analytics; the contract requisitioning, catalogue, and all of the services linked with that.”

Partners delivering applications

The Tradeshift platform is home to more than 300 visionary applications, like FRDM, which allow users to make purchases that elevate both profits and people by offering supply chain transparency from supplier down to raw materials level. “With the FRDM application, you can target the areas where slave labour is prevalent. If the product or service you buy has the potential to be at risk, you can mitigate that risk and aim to eliminate it.” Allied to this are sustainability apps such as Eco and tools for a multitude of tasks from background checks and spend analytics to requisitioning and forecasting.

Tradeshift on trend

Anderson notes that as supply chains digitise, clients are demanding speed, ease of use and a lower cost of implementation. He recalls that in previous roles, as CPO at MetLife and Fidelity, he would create a marketplace inside the company of trusted suppliers with the right risk portfolio that was sustainable, to allow internal customers to get the job done. This could take months – even years in some cases – to set up the suppliers and relevant content, contracts and technology. “My goal now is to be the CPO of an entire network of companies,” says Anderson of the Tradeshift marketplace. “There are organisations out there that separate you from your supplier. I consider that bad business. Our platform will give companies the flexibility to have products and services readily available to capture and curate their own solutions in a matter of days. Now they’re going to get aggregated buying opportunities, but still be able to have their relationship with their manufacturer or supplier.”

Predictions on Procure-to-Pay

Sylvest believes the marketplace embodies the idea of the network, rather than the traditional one-to-one procurement model which misses out on the economics of scale. It’s a place where Tradeshift’s app strategy (300 and counting) will flourish. “When we founded Tradeshift, we chose to make all of our interfaces open source for third parties to develop services,” he explains. “B2B spending is very complex and for every category, especially materials, third parties will bring specialism that can enhance services across different geographies. What will set us apart in the market will be the ability to combine the procurement process with product formation, fulfilment, payment and the financing of the physical goods or based on the invoice.”

Sylvest is most excited about the work Tradeshift is doing with ten of the largest banks (HSBC, CitiBank etc) to provide supply chain financing and discounting in the App Store. “They’ve chosen to have a presence in a competitive marketplace where it’s up to users to decide which financial services suit them best. For me this is proof that our network strategy is working.”

New frontiers for Tradeshift

Tradeshift Frontiers is the company’s digital innovation arm working on two major themes: the future for FinTech and how to connect the physical supply chain with the financial supply chain. Both of these are looking at ways to integrate Blockchain. “Tradeshift Cash was launched in 2018. With half a trillion dollars flowing through the network in receivables, what if you could take those receivables and tokenise them? By turning them into a digital asset you use the Blockchain as a marketplace where invoice tokens are for sale amongst financers. Instead of a traditional sale of invoice volumes over six months, we envisage a much more fluid process where invoices are tokenised in real time and out up for sale. In this competitive model financers compete based on their appetite for risk and knowledge of an industry.” Tradeshift is also working on Ecosystem Finance – extending credit for outstanding receivables between two parties down the supply chain with further tokenisation.

Goals

Faster and friction free financing is the ultimate goal for Tradeshift as it bids to make B2B buying as simple as using a consumer credit card. A key part of its development over the next 12 months will be onboarding partners to deliver critical mass with SKU development for products on the shelf.

“Once you’re digitally connected, then you start to build the value from there,” adds Anderson. “But suppliers don’t necessarily see that value on day one, it takes them time to be able to turn that into an ROI… But, if we look into the future, the only suppliers you’ll want to deal with are those that are digitally connected; more accurate, complete, compliant and transparent in their process. The alternative will be risks in the cost structures.”

Over the next 12 months, the goal for Tradeshift is to add more suppliers to its marketplace, and grow the digital ecosystem. “We’ll build the tools and the connectivity to be able to add a massive amount of value,” pledges Anderson. “It will open people’s minds, just like they did with Y2K when they had to invest in new ERP systems, and they’re investing in this digital environment. This is not an evolution, this is a revolution in how supply chain thinking will be done.”

DCT Abu Dhabi, has achieved the Chartered Institute of Procurement and Supply, CIPS, – Corporate Platinum Award, according to state…

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DCT Abu Dhabi, has achieved the Chartered Institute of Procurement and Supply, CIPS, – Corporate Platinum Award, according to state news agency WAM.

The award is the highest certification in the procurement profession globally that can be reached by an organisation. DCT Abu Dhabi is the only organisation to have jumped from CIPS’ Standard Level, directly to CIPS’ Platinum level in a record time of only two years. Traditionally, this process takes four to six years with both Silver and Gold levels in between.

Speaking on the occasion, Saif Saeed Ghobash, Undersecretary of DCT Abu Dhabi, said: “Undertaking the CIPS Procurement Excellence Programme has been incredibly beneficial for DCT Abu Dhabi’s procurement function, and by achieving its highest Platinum Award, we have proven that through commitment, hard work and skill, great things can be achieved. The process has been an invaluable way to assess performance, enabling us to measure our work against the internationally recognised benchmarks set by CIPS. This award puts DCT Abu Dhabi among rarefied company, and will boost DCT Abu Dhabi’s reputation globally.”

The CIPS Procurement Excellence Programme is the only independent, comprehensive, procurement-specific assessment of its kind, which measures the procurement function against world-class standards. It is a globally recognised award that demonstrates how well an organisation is performing whilst building a competitive edge and driving world-class service delivery.

The CIPS Platinum Programme covers five areas of the procurement function and organisation, i.e, Leadership and Organisation, Strategy and Policy, People, Process and Systems and Performance Management.

CIPS is the leading professional organisation in procurement and supply chain management and aims to promote and develop high standards of professional skill, ability and integrity among all those engaged in purchasing and supply chain management globally.

In this article, Jon Hansen examines two opposing elements of the digital procurement paradox, including what organisations can do to…

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In this article, Jon Hansen examines two opposing elements of the digital procurement paradox, including what organisations can do to begin to address the stalemate… 

You are likely familiar with the phrase about irresistible force meeting an immovable object.

When it comes to procurement in the digital age, the same paradox applies to technological advancement and the need for greater security. In other words, technological advancement is the irresistible force that promises to transform procurement and business in general.

While there are several obstacles to the adoption of technologies such as the absence of “clean data” within an enterprise, security is the immovable object that executives cite as being their greatest concern.

The current lay of the land

In my paper Digital Transformation in Procurement, I referred to a McKinsey survey of 1,600 incumbent global companies. In the survey, 23% of the responding executives report having a digital strategy in place. Of those, just 2% have a strategy that includes their supply chain.

While the above numbers are in and of themselves noteworthy, in the context of the 2%, the results of a second survey are even more surprising. In that one, 70% of the respondents say that the supply chain is essential to delivering on the digital promise.

Think about this revelation for a moment. Respondents to a second survey state that the supply chain is essential to realising their company’s digital aspirations. With the first survey, only a small number of organisations have a strategy for digitising their supply chain.

The obvious question is, why?

The risk side of reward

Earlier this year, I had a chance to sit down and talk with the Director, Cyber Security for Cisco Michael Tryon. The focus of our conversation was on how organisations must have a “sure and safe pathway” towards achieving their digital objectives. 

It was an interesting discussion on many levels. What stood out to me the most was Tryon’s reference to an article he had written in which he discusses a report from North Carolina State University.

According to Tryon, the findings from the University’s report show that the top concern of executives in the study was an inability to manage a new risk. The risk to which they are referring to is those associated with rapidly evolving technological advancement.

What is it about evolving technologies that have executives stuck in a holding pattern between the recognition of digital’s importance and the realisation of its promise?

The Amazonisation effect

From the standpoint of procurement, concerns with risk start and end with the Amazonisation of the supply chain, including increasing decentralisation.

One of the great things about Amazon is the ease at which someone can buy a product online with little to no difficulty. Purchasing is a simple exercise that is becoming progressively easier as the platform leverages RPA and AI to provide a seamless and intuitive experience for the buyer at home.

The Amazon experience at home raises the question; why can’t the same buying process exist in the work environment? The answer; decentralisation and independence and the potential risks associated with each.

Independence on the Edge

In another interview I did with the President of Hewlett-Packard Enterprises, there was the suggestion that the success of a digital strategy was dependent on going beyond the cloud to work at the edge.

HPE President Paula Hodgins referred to a study indicating that by 2020, each person globally will have up to 10 IoT devices at their disposal. We are no longer talking about a BYOD to work scenario. We are talking about individuals having incredible computing power at their fingertips all the time – buyers included.

According to Hodgins, this personal digital capability provides tremendous opportunities to maximise efficiency. By dealing with data (or requests) at the point of capture as opposed to pushing everything back to the cloud for processing saves time and money.

Like the Amazon experience, the consumerisation of the procurement process in business is a reality that all organisations need to recognise and embrace. Otherwise, they may not remain competitive in a demanding global economy.

But through the above decentralisation, the vulnerability of working on the edge, i.e., having many access or entry points to a company’s internal information through a myriad of personal IoT devices poses some risk. How do you control access? How do you protect against unauthorised breaches?

Based on the findings of the North Carolina State University report, the best way to address these as well as other concerns regarding securing the supply chain is to wait.

But is this the best option?

Getting to the reward of risk

Overcoming the above challenges comes down to two things.

The first is a willingness on the part of executive leadership to change their way of thinking about how procurement “works.” The second is the development of a viable security strategy.

A January 18th, 2019 Clint Boulton article in CIO magazine sums up the need for executives to align their thinking with the realities of an emerging digital world. In the article, Boulton writes; “your digital transformation is doomed unless you empower employees to succeed in the digital era.” He then goes on to say you must “craft a workplace that boosts engagement and agility.”

Engagement and agility come with decentralisation. It is providing all buyers (not just procurement people) with the ability to conduct transactional business at “the edge” leveraging new technologies. The new technologies to which I am referring include mobile devices, computers and personal analytics.

Once executive leadership not only recognises the tremendous competitive advantages of a digital procurement strategy but that they have to take action to make it a reality, they can then turn their focus to securing their supply chain.

A sound strategy

Securing the supply chain is critical. Especially in an age where with increasing frequency organisations are already sharing more and more information with third parties such as suppliers, business partners, and even customers.

Referring, once again to my talk with Michael Tryon, you need to respond to the “pervasive threats that are inherent in this exciting new world.” The best way to do that is through “a comprehensive cybersecurity strategy. One that focuses on prevention, detection, response and recovery.”

It is in this area that the CIO can take the lead. Within the framework of a collaborative environment that includes the key stakeholders, the CIO can create a strategy that adapts to the new technologies and the way they work.

For example, one organisation suggests using a distributed Security model in which they deploy and interconnect security controls at “points of digital engagement,” i.e., on “the edge.”

A final thought

When it comes to procurement working on the digital edge, it is important to recognise that all buyers do not have to be procurement professionals. Nor should they be.

In other words, people at a department level can leverage RPA and AI technology capabilities to do direct purchasing. Procurement professionals can then focus on the more strategic and complex supply chain acquisitions.

From a procurement standpoint, the effective utilisation of resources both within and external to the procurement department is how organisations will realise the greatest return on their digital strategy.

CPOstrategy met with procurement leaders from banking, utilities, consulting, solutions providers and financial services. Taking the temperature on the latest…

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CPOstrategy met with procurement leaders from banking, utilities, consulting, solutions providers and financial services. Taking the temperature on the latest trends and predictions for the future we spoke with Barclaycard, Enel, Bain, Coupa and Legal & General.

Barclaycard

Rob Tuckwell, Director of Partnerships & B2B

Barclaycard is building an ecosystem of P2P software providers (including Coupa and Amadeus) with the aim of bringing payments and procurement closer together for B2B. “We’ve got to make sure that our payment products are embedded within those ecosystems,” says Tuckwell who is keen for Barclaycard to tackle “horrendous inefficiencies” for its customers… “Digital payment products work in the consumer space. Why is that not filtering through to business? Our strategy is to go from Procure-to-Pay to ‘Procure-and-Pay’. It’s a really key difference that they’re not separate processes anymore and the future for payments and procurement is going to be the convergence of these areas.”

Enel

Salvatore Bernabei, Head of Global Procurement

Enel is among the world’s leading integrated private utilities with a presence in over 40 countries and more than 70 million retail customers. Bernabei is focused on developing relationships to enhance flexibility, minimise time to market and add value. “We welcome innovation by vendors,” he says. “We say: I have a challenge here, I am not capable, with my knowledge, to solve it. It’s a very precise case study. I invite suppliers, offer a case with one month to provide a solution before I select the best idea. We offer the possibility to experiment, on our plans and assets before a contract is awarded.” To support this approach Enel has an agreement with crowdsourcing platform Innocentive.

Bain & Company

Borja Tramazaygues, Procurement Leader EMEA & Gerry Mattios, EVP, APAC

Consulting firm Bain & Company’s Performance Improvement Practice advocates targeted solutions for immediate impact combined with broad transformation programmes to redefine how work gets done. “Once we have helped implement technology to optimise tactical processes in procurement, such as invoicing and purchase orders, we have to address the broader digital struggles of an organisation,” explains Mattios. “Procurement tends to be a back-office activity linked to savings,” agrees Tramazaygues. “There’s a big opportunity for procurement to be a real part of the business; it can play a big role in rebuilding the supply chain to make it more agile, opening the best markets and bringing innovation through from suppliers.” Tramazaygues and Mattios believe new approaches are vital in the current inflationary environment.

Coupa

Rajiv Ramachandran, Product Strategy Management

Coupa offers an all-in-one, end to end, business spend management platform. “Coupa provides users the richness of insights, based not just on their own data but truly normalised, and anonymised data across all the buyer, supplier relationship that exist on our cloud-based platform,” says Ramachandran who cites the need to be able to use consolidated data to chart the efficiencies and risks of suppliers. It’s a “game changer” he sees customers greatly benefiting from when analysing B2B data on a platform holding approximately one trillion dollars of spend. Coupa believe the ability to match your progress against the community of the platform, and take efficiencies from it, points to the future for agile procurement as part of an ecosystem.

Legal & General

Maarten Ectors, Chief Innovation Officer

Legal & General is focused on disrupting procurement from the inside out. Ectors stresses the importance of allowing ecosystems to generate innovative solutions for its customers. “You need to get everybody at your organisation excited about innovation,” he advises. “You can’t innovate on your own and if you don’t collaborate with the challengers in the market they can only disrupt you, but not in a positive way.” Ectors highlights an important trend, the need to optimise the cost of failure: “Our Beta programme runs four-week trials with new companies to assess potential new partners,” he explains of a process which allows L&G to remain agile in its approach to innovations that can speed up claims handling from days to minutes.

By Kevin Davies Listen to the podcast here! In your career you’ve identified some serious unlocked strategic potential in the…

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By Kevin Davies

Listen to the podcast here!

In your career you’ve identified some serious unlocked strategic potential in the supply chain, what first alerted you to this?

I have been working for some time with Dr Bram Desmet and he wrote for me, one of the most profound and excellent business and supply chain strategy books called “Supply Chain Strategy and Financial Metrics”. Now, while I was actually in contact with him, I had the privilege to contribute to the book with the forward, and also with a business case study on my previous work with a company called Johnson Controls.

That encouraged me to look into the concept of everything involved in business transformation and supply chain and the idea of taking a more strategic approach to it. Leading up to Bram and myself, working on a concept called “Strategy Driven Supply Chain” and also the “Strategy Driven Value Planning and Execution” model.

In your white paper, The Concept of the Strategy Driven Supply Chain,  you explore the current trend of businesses putting their supply chain front and forward It highlights some of the issues that companies are going through…

There’s an enormous amount of change. We know that probably 63% conform, but their CEOs are going through a business model change over the next couple of years. Now, what we are also highlighting is that lots of companies are overly focusing on gross and margin improvement, and have a somewhat  lack in focus on shareholder value. That’s measured in a metrics called Return on Capital Employed (ROCE). Another problem is that companies don’t have enough understanding of the true complexity of their supply chain and how to balance service costs, and capital employed within what Bram calls the ‘supply chain triangle’.

Having a better understanding would lead to sharper strategies and stronger execution. This would lead to more sustainable performance and results. So it’s really that sustainable performance and results aspect which comes through, and we believe that it looks like a perfect storm. Supply chain is at the front of it. A supply chain that is seen from an entity point of view, and not just a functional point of view, is really important to companies. Companies have different supply chains and each of the supply chains needs to be strategy driven. Then, different strategies lead to different supply chains with different targets and different trade-off, for service cost and capital employed. There’s also a belief that supply chain strategy is simply following a business strategy or from the business strategy. We do believe that, but it is not a sequential process and the value proposition, and the supply chain are the ying and the yang of the business strategy. Only together can they define how business generates shareholder value and is measured by ROCE.

So, it’s about looking into supply chain from the perspective of driving value for customers, and for the business. Supply chain delivers on the promise that businesses are making through their value proposition.

Does this represent an evolution from the traditional operational back-end supply chain function?

Absolutely! It’s an evolution defined by asking the question as to what supply chain management actually is. We believe that supply chain management is more about balancing the supply chain triangle of service cost and cash. It is also about facilitating the internal debate between sales operations and finance. It somehow takes on the role of balancing these kind of trade off decisions.

Now that also proves that the supply chain is coming from the back room into the front room. It is becoming an equal partner around the C-suite, hence we are also talking about putting the supply chain or Chief Supply Chain Officers (CSCOs) into a more strategic role. That would require people operating on that level with more financial and strategic skills instead of in the past, having just operational skills. They will be measured on their operational skills and their execution.


Are you seeing examples of that in action now?

Companies are now taking a more strategic approach. We also see companies promoting people who have lead the supply chain become the Chief Executive Officer. You’ve seen other companies in the US like Apple. Tim Cook, who had been leading the supply chain for Apple for many years under Steve Jobs, is now the one leading the organisation. Now that’s a very good example when you look into how supply chain becomes a more competitive advantage for an organisation that has and understands the importance of having a great supply chain. It also shows how important it is to have somebody leading the organisation that he has an operational, financial and strategic skillset. The future skills requirements of the CSCOs in many companies will follow this path.


Would this require quite a substantial cultural shift? How important is change management to an evolution of this kind?

Yeah, absolutely. We say that it takes a bit of a leap in terms of maturity of organisations, and also changing and shifting the paradigms from where they are today to where they need to be in the future. Now that requires a value creation and that is why we actually started to work on the concept of the strategy driven supply chain. Even knowing that this is maybe five to ten years out. But starting the debate and starting the value creation really helps to facilitate and move the needle up. It’s enabling organisations to have  a more serious look into their strategic supply chain and what it means to them as well as what it means to the overall strategy employment process in the organisation.

Some organisations took the approach of being driven by gross initiatives, without truly understanding the strategy behind them or the value proposition and even the complexity of the business. How do they want to differentiate themselves in the marketplace and what does it mean in terms of the service they have to deliver, the corresponding cost as well as the capital employed in their environment? We are looking at how we can help organisations by highlighting the problem or the potential issue. More importantly, it’s about finding a solution and an approach, and taking a different more strategic approach in future. We’re highlighting how the supply chain triangle can be balanced differently by promoting the CSCO into a more strategic role.

Would that result in the CSCO reporting on a peer-to-peer basis to a CEO?

It’s an equal partner in the business, and with the same level of importance  as the C-suite, (CFOs, CEOs etc.) The CSCO becomes the ring man. They will help the CEO, and the entire leadership of the company, including board of directors, make more informed decisions, or as I would call it ‘deliberate choices’.


So the key to this is that the supply chain function has a wealth of data and knowledge and insight readily available to use?

It’s also about the reality of balancing the triangle. When you think about a supply chain, and the mission of a supply chain, it’s often about delivering the right product at the right time, at the lowest cost, at the lowest inventory. There is conflict in the triangle all the time. It’s about a service you want to give to your customers. When you talk about service, it’s not only how you move your products and deliver them but it’s also the complexity of the product. It’s about the order flexibility you want in order to give you the product portfolio as such, but also having an understanding of what it means in terms of cost you’re going to have in the organisation and the capital employed.

When we talk about the capital employed, it’s really about two elements: a working capital (the decision you have to make to strategically keep a certain inventory level in your organisation) or it’s how you deploy your assets in a fixed asset structure. How this applies to the conflicts and the triangle and the critical stakeholders in your business. The VPO of sales, as an example,  what does he really care about? It’s probably the sales top line and market share. The COO or Head of Production? The primary concern is probably efficiency, as efficiency drives cost. But if you think about the VPO sourcing of purchasing, it’s the spend and how the company can buy more volume at a lower cost. That’s conflict. 

So the question then becomes;  who is best positioned in a company to balance that? Decisions and people being driven differently in terms of service cost and cash and the best positioned person to do that would be the CSCO. Now that’s the best thing for organisations to understand and if they do so, it can really set them up for a very successful future or operating on a new competitive level.

Do you envision a situation where a CSCO could evolve and transition
into a successful CEO?

Yeah, absolutely. That’s a prediction Dr Bram Desmet and myself are making and we believe you will see it happening more and more in the future, and in organisations where successful CSCOs who have those operational skills, financial skills and strategic skills are the best people for taking the job at the top of the house.

If a supply chain function is evolving in this way it would have to shed some of its traditional operations, is it true to say that some of this could be liberated through technology?

Yes you are right. You see the merge between the physical worlds and the digitalisation of the digital world, and enabling technologies. Companies are not only selling products and services, they sell solutions and outcomes. That is a new complexity that organisations are dealing with that requires certain changes and like I said before, be crystal clear about the value proposition you’re going to have or want to have as a business, and what it means in terms of the corresponding supply chain, and now your supply chain or different supply chains are delivering on the promise you made. The question is now about how you deploy your resources in your organisation more efficiently and effectively. That’s what we are talking about.

Do you think this would affect, going forward, the training of supply chain officers?

I believe it goes deeper than that. I believe if affects structures, it affects roles and it affects your whole recruiting process in terms of the discourse you would need as an organisation. It would also impact talent development.  Going back to the example of the CSCO, in the past he has probably been promoted based on his ability to bring in results based on how the organisation performs. Now in the future I think it would be more about the balance between how he is actually contributing to the overall results of that organisation based on a strong operational performance. It’s also about financial results of an organisation being top line, bottom line and results or returns and what kind of strategic skills he has in terms of taking the organisation forward.

So that’s what we are talking about and that requires a new skillset and new talents in the organisation. There will need to be new training which needs to be provided and opportunities for people to move into these kind of roles.


What would you say are some of the obstacles to the evolution of this role?

Probably mindset and the culture of an organisations where they have traditionally rewarded their people differently in the past. They need to overcome that and look at what that change means for them. They need to be ready with their maturity and company culture to move and shift the paradigm to a more strategy-driven supply chain and value planning and execution model. So culture probably is the key obstacle in the evolution of the role.

In your vast knowledge, do you see any industry sectors where it’s accelerating more than it is in others?

Well that’s a very good question. I would say, from my own perspective it is that you see some of industries a little bit ahead.  Technology companies for example would be ahead in terms of looking at that from more of a strategic point of view. Overall I would say that more and more companies are at the starting point of truly understanding that change needs to happen.

Click here to read it! The latest issue of CPOstrategy is live and this month’s cover story features Natalia Graves,…

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The latest issue of CPOstrategy is live and this month’s cover story features Natalia Graves, VP Head of Procurement at cloud management giant Veeam Software who discusses its recent procurement transformation. “We looked at simplifying our processes and putting systems into place that allow Veeam teams across the globe to move even faster,” she explains.

Elsewhere, we speak to Dr. Preston Butler JR, on achieving procurement excellence at Vinnell Arabia, which provides logistics and training to the National Guard of Saudi Arabia. We also spend time with Mahmoud Al Alawi, Director of Procurement and Contracts at Higher Colleges Technology (HCT), who discusses the organisation’s digital journey in procurement. While Frank Vorrath, Executive Partner Supply Chain at Gartner details the hidden potential of a strategy-driven supply chain. We also provide five big takeaways from World Procurement Week and list the best procurement events and conferences from around the globe.

Enjoy the issue!

Kevin Davies

Digital transformation is making it easier for procurement organisations to “do more with less,” according to newly-released Procurement Key Issues research from  The Hackett…

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Digital transformation is making it easier for procurement organisations to “do more with less,” according to newly-released Procurement Key Issues research from  The Hackett Group, Inc. (NASDAQ: HCKT). But there is still significant need for procurement to address its critical development priorities for 2019, including: improving analytical capabilities, aligning skills and talent with business needs, leveraging supplier relationships, enhancing agility, and achieving true customer-centricity.

Digital transformation is beginning to have a significant impact on procurement organisations, The Hackett Group’s research found, with 30-40 percent saying it has had a high impact in achieving enterprise objectives, enhancing performance, optimising the service delivery model, and addressing roles, skills profiles, and needs. Over the next two to three years, procurement organisations expect the impact of digital transformation to dramatically increase, with key areas like robotic process automation and advanced analytics seeing particularly high adoption growth rates (2.3x and 60 percent, respectively). Broad adoption of e-procurement technologies is also expected to grow by nearly 2x.

Procurement expects its budget to grow at a much slower pace this year than in 2018 (1.3 percent, versus 2.7 percent last year). Procurement staffing shows a similar trend, with 0.9 percent growth expected, versus 2.8 percent in 2018. With revenue growth expected to increase from 5 percent in 2018 to 5.7 percent for 2019, this creates significant productivity and efficiency gaps that procurement organizations must overcome.

A complimentary version of the research is available for download, following registration, at this link:http://go.poweredbyhackett.com/keyissuespro1902sm. Note – The full research piece includes 7 charts containing more than 60 complete metrics.

Procurement has aggressive plans to increase its use of digital tools and procurement-specific technologies over the next two years, the research found. Procurement will invest heavily in cloud-based business applications along with several data management technologies: data visualization (where adoption rates will rise by 24 percent), master data management (57 percent adoption growth), and advanced analytics (60 percent adoption growth). Spend optimization analytics and dashboarding adoption rates are expected to grow by 61 percent. Broad-based adoption of e-procurement technology is expected to grow by nearly 2x.

Use of mobile computing and robotic process automation (RPA) are also expected to rise dramatically, indicating a focus on more efficient, agile processes across the procurement lifecycle. RPA sees the highest adoption growth rate among digital technologies, at 2.3x. While RPA is primarily being used for procure-to-pay processes at present, there are a range of other procurement areas that can benefit from automation of repetitive work, including updating of vendor master files and electronic auction setup.

Procurement-specific technologies are expected to become far more broadly adopted over the next two years, with nearly universal adoption of e-procurement, spend optimization analytics, and supplier relationship management systems, and just slightly lower adoption rates for e-invoicing and contract lifecycle management. This represents a major shift toward customer-centricity, designed to enable organizations to simplify and streamline processes, and improve agility.

The research found that procurement’s 2019 actual transformation focus is poorly aligned with what should be its critical development priorities; i.e. areas identified as of critical importance, but with very limited ability to address. Among those, development of analytical capabilities is a transformation focus for about half of procurement organisations. Modernising application platforms is another top transformation focus, and is a key way to achieve simplification due to the complexity of many legacy environments. Consolidating multiple legacy systems is also a critical step towards to improving data management and analytics.

But of the other critical development areas, less than a third of all procurement organizations have a major initiative in place to improve skills and talent with business needs, and even fewer said they intend to work on agility or focus on improving customer-centricity and supplier relationship management capabilities.

Procurement is also focused on its role enabling the enterprise in 2019, with an array of priorities that include elevating their role as a trusted advisor, continuing to reduce purchase costs, improving stakeholder satisfaction, and enhancing agility.

“Procurement organizations are clearly making investments in digital transformation and are seeing real benefits. The focus on improving analytics for 2019 is particularly encouraging. But the laundry list of critical areas where they have very limited ability to make improvements is very disconcerting,” said The Hackett Group Principal & Global Procurement Advisory Practice Leader Chris Sawchuk. “Despite the fact that procurement knows what it needs to do, it’s simply not fully translating into an effective plan of action. Procurement must become fully dedicated to advancing its capabilities in analytics, customer-centricity, agility and more, while also investing in the right talent to help lead those changes.”

According to The Hackett Group Research Director Laura Gibbons, “Failing to address the five critical development areas poses a significant risk. For example, we see skills & talent as a particularly critical risk factor. Procurement has begun to truly invest in digital transformation, but if it doesn’t have the right people in place, digital tools could end up being misused or wasted. You need the right people, with the right skills in place, to take full advantage of what digital transformation can offer.”

This same issue holds true in several other of these critical development areas,” explained Gibbons. “Agility is critical if procurement is to be able to respond to market changes. Without a focus on customer-centricity, procurement can miss significant opportunities for improving efficiency, simply because they don’t effectively know what the business needs. And without supplier relationship management, opportunities for innovation can be missed.”

Sawchuk explained that the potential impact of digital transformation in procurement is powerful. “Advanced analytics can enable companies to become less reactive and more predictive, more quickly and accurately identifying and avoiding risks. It can drive dashboards where anyone can log in and get real-time data.  Dynamic discounting is another area that can be very challenging for many companies, but can be easily enabled by digital transformation.”

“Smart automation can reduce operating costs, and eliminate transactional work, freeing up staff time for more value-added efforts,” said Sawchuk. “Even if procurement can simply focus on a larger percentage of the spend base, the value is very significant.  And digital tools can streamline and improve the experience of internal customers and suppliers.”

The Hackett Group’s 2019 Procurement Key Issues research, “2019 CPO Agenda: Building Next-Generation Capabilities,” is based on results gathered from about 150 executives in the US and abroad, most at large companies with annual revenue of $1 billion or greater.

The Chartered Institute for Procurement and Supply (CIPS) has released its Procurement Power List, which recognises those leaders in the…

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The Chartered Institute for Procurement and Supply (CIPS) has released its Procurement Power List, which recognises those leaders in the profession pushing the field of procurement forwards. 

CIPS and Supply Management asked for nominations from a panel of experts and created a long list of candidates, including the CPOs of FTSE 100 organisations and significant public sector organisations.  These names were debated during a panel with leading executive search agencies and industry experts, to create a list of 30 names, plus 10 ones to watch.

The following criteria were used for nominations: 

  • Employment status. Candidates must be employed practitioners and not working as interims or consultants. They must be of a significantly senior level (CPO and above) and have a successful track record from previous roles, as well as being their current role long enough to have achieved significant outcomes.
  • Geography. CPOs based in Europe, or those who work for global organisations but have responsibility for European procurement teams.
  • Internal influence. They sit in a prominent place in the company hierarchy and are actively involved in board and ExCo level discussions in their organisation.
  • External influence. They have non-executive board positions in listed, private or public bodies.
  • Influencing the wider profession. They share their knowledge with the profession via trade magazines, blogs, social media and speaking at events.
  • Developing others in the function. They give back to more junior procurement and supply professionals, for example mentoring or speaking in schools.
  • Depth and breadth of experience. They have responsibility for other areas of the business beyond procurement and supply.
  • Their relationship with CIPS makes no difference to their inclusion, or not, in the list and they do not have to be CIPS members.
  • No professional with an official connection to CIPS can be on the list, for example, board members or committees. 

The Procurement Power List will change and evolve annually. 

THE LIST 2019

The Procurement Power List for 2019 (in alphabetical order):

Ones to Watch 2019:

“Great companies need to do three things: out-think, out-compete and outperform their competitors…” Frank Vorrath, Executive Partner of Supply Chain…

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“Great companies need to do three things: out-think, out-compete and outperform their competitors…” Frank Vorrath, Executive Partner of Supply Chain at Gartner.

This week, in the third episode of an exclusive six-part supply-chain masterclass, Frank Vorrath, Executive Partner of Supply Chain at Gartner, reveals how supply chain excellence operating systems can really help build the muscle of an organisation, as enterprises evolve and react to volatile markets, increased competition and rising customer expectations.

Click here to hear the whole interview!

“There are still many companies struggling to make long term commitments, and not really addressing the balance between the uncertainty of short-term financial performance and long-term investments, to build better capabilities. Now for many, many years, there has been continuous improvement initiatives being around standardisation of processes and all these good things, but we need to take that to the next level of building truly end-to-end capabilities.

We’re talking about building something which creates more sustainable business performance and results… When I talk about a supply chain excellence operating system, it’s really to build the muscle in an organisation, to be able to cope with future requirements, from the customer side in responding to customer expectations, but also being able to compete differently in the marketplace and building capabilities related to people, processes, technology as an enabling element…”

by Mike Dickinson – SMMT Industry Forum General Manager, automotive and supply chain   Up until recently, supply chain managers…

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by Mike Dickinson – SMMT Industry Forum General Manager, automotive and supply chain  

Up until recently, supply chain managers have called the shots when it came to supplier relationships. Suppliers were dictated to when it came to products and the quantity required, with contracts won or lost on price alone.

It was also standard practice for problems with supply to result in suppliers being reprimanded – either fined or presented with less favourable terms or treatment. In turn, customers had prices dictated with little negotiation on other key areas such as service, MOQs and delivery time frames.

Nowadays, suppliers are part of the business, and that previous management style, especially in emerging sectors or new, innovative businesses, just isn’t conducive to a healthy supply chain. 

In order to improve and maintain a good relationship with suppliers, supply chain managers need to move away from an outdated business culture of finding someone to blame, and towards a more modern, collaborative approach. 

Top five tips for maintaining good relationships with suppliers

  1. Communication: Talk to suppliers regularly
  2. Teamwork: Plan for contingencies and accept accountability
  3. Understanding: Have a working knowledge of a supplier’s business and/ or operating procedures
  4. Stay flexible: Adapt to everyday issues as they arise and resolve them quickly
  5. Feedback: Encourage open discussions around how to work together more efficiently in the future

How millennials will manage suppliers

This ‘resolve and improve’ mentality looks likely to become standard practice, as according to Relate* by 2025 75% of the workforce will be millennials (those born between 1981- 1996). Due a shift in working behaviours, this generation looks likely to have a greater impact on supply chain relationships than their predecessors

A recent article in Forbes** stated that, “millennials will only interact with brands that are open and transparent, stand for more than their bottom line, and address environmental and socioeconomic issues in the community.” The desire to see suppliers as part of the team, rather than a customer and provider relationship, will better suit a changing supply chain culture.

The management styles of previous generations – such as Baby Boomers (1946 – 1964) and Gen- X (1965 – 1980) – tended to be more aloof, with a focus on the bottom line and an ability to confront problems head on. While there are benefits to that approach, it just won’t work for millennials who have a need for social responsibility, constant communication and teamwork.

Prices, scaled discounts, collaboration through planning, rebates, commitment to buy, returns acceptance for new range releases, VMI, consignment stock agreements – are already common for those who actively manage their relationships with suppliers.

Different sectors also differ in their changing approach to supply chain relationship management. Heavy industrial areas such as Automotive, Industrial Machining and Aerospace, are lagging with the new approach to supplier management, while the more public-facing industries – particularly sectors with a strong consumer reach where their customer base demands high quality, responsible, efficient supply – such as Technology, Fashion and Fast-Moving Consumer Goods, are pushing the boundaries of what was once standard practice.

Technology is lifting limitations

These forward-facing industries are also more likely to embrace new technology and be willing to apply it to their management strategies. Technology which can help to lift the previous limitations of supplier relationship management is already available. For example: Blockchain promises to allow visibility throughout the supply chain, making it easy to view key factors such as: current stock, production, shipping information, quality issues and pricing of raw material data.

Transitioning from a one-sided supplier management approach, to a joined-up partnership means that measuring a full range of services (price, lead time, quality, customer service, environmental sustainability, CSR) is essential if technological advancements are to be adopted. 

In process crucial areas of business, such as supply chain, good relationships are key to delivering to targets, and no supplier will sign up to sharing data (honestly) if there is the fear of punishment as a result.

Relationships don’t break down overnight

Healthy working relationships are built on trust, mutual respect, mindfulness and communication, however, when we neglect one or more of these areas, the relationship suffers.

Usually there are a number of errors which result in the erosion of trust and respect over time. These errors usually fall into one of the following categories: Pre-contract mistakes, contract errors, termination issues and the breakdown of relationships.

Businesses who rely on an efficient supply chain to remain profitable know that the relationships with those within the chain are paramount.  It is essential for these businesses to build and maintain high performing relationships with customers and suppliers. The inability to maintain an effective working relationship can have a huge impact on the entire supply chain, causing issues such as:

  • Stock availability problems due to poor performance
  • Obsolescence issues due to variability in supply
  • Being stuck holding excess levels of stock to buffer the impact from suppliers
  • Little to no support to manage changing demand patterns
  • Increasing supplier costs with no negotiation

Training is available

Companies who feel they need support can turn to analysts such as SMMT Industry Forum, who helps global manufacturers understand, optimise and improve both manufacturing capability and business performance. SMMT Industry Forum was created by the UK government, the Society of Motor Manufacturers and Traders, and vehicle manufacturers in order to improve the competitiveness of the UK’s automotive supply chain.

Mike Dickinson has over 25 years’ experience in supply chain and manufacturing leadership roles, having worked for Nissan, General Motors and Qoros Automotive. He has managed global operations including greenfield build-ups and brownfield transitions, in Asia Pacific, Germany and Shanghai. He was trained in lean manufacturing techniques by Japanese Master engineers in the 1980s.

* https://relate.zendesk.com/articles/millennials-as-managers/

**https://www.forbes.com/sites/jefffromm/2017/12/13/why-label-transparency-matters-when-it-comes-to-millennial-brand-loyalty/#782843563dac

The latest International Data Corporation (IDC) Innovators report highlights five companies who are disrupting the procurement world with their use…

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The latest International Data Corporation (IDC) Innovators report highlights five companies who are disrupting the procurement world with their use of technology, with a particular focus on improving and streamlining supplier relationships. Here is our round-up of who they are and why you should be checking out their offerings.

Written by: Lucy Dixon

FairMarkIT
Boston-based FairMarkIT offers a tail spend management platform that uses machine learning to take charge of procurement. In other words, it will save time and money on the significant amount of expenditure that is not already actively managed by procurement processes – the sourcing and buying of low-value items that can make up the majority of an organisation’s purchases. It is a web-based SaaS platform that offers an alternative to outsourcing and integrates with ERP and P2P. FairMarkIT’s customers typically see between six and 12 percent in cost savings.
fairmarkit.com

LVRG
LVRG promises easier and stronger supplier relationships, and it delivers on this by freeing up more of your time to work on those relationships rather than supplier research or data entry. The system builds up summary snapshots of all your suppliers using available data and integrates with existing software, from Asana and Slack to Dropbox and Salesforce, which will help give the full picture of your suppliers. Security is a top priority for LVRG, and it is committed to getting the right balance between transparent communications and privacy concerns.
lvrg.ai

SirionLabs
SirionLabs is shaking up the procurement world by using technology to disrupt how businesses think about contracts. Its contract management software offers supplier governance, revenue assurance and enhanced visibility. It automates traditional governance processes end-to-end and delivers real-time data-driven analytics, which will streamline contract management and automatically generate new contracts, while tracking the real-time performance of existing contracts. Its latest innovation is SirionBI, which enables real-time access to big data generated during large services engagements between organisations, including data for obligations, service levels, invoicing, issues, actions and spend.
sirionlabs.com

Tealbook
This Ontario-based company is a global network of buyers and suppliers, created using software developers, machine learning engineers and procurement experts. Machine learning and analytics give the user a transparent view of every supplier, with more valuable insights produced as usage increases. Tealbook’s in-house data scientists support procurement teams with constantly evolving technology to drive change. It invests heavily in research through a partnership with the Vector Institute for Artificial Intelligence and has a growing partner community of innovative companies working together to transform procurement.
tealbook.com

Vizibl
Vizibl is all about growth through supplier innovation and collaboration – harnessing the expertise of all the organisations in your network. It is a cloud-based system with the ability to help you manage all supplier relationships, and at the same time bringing the benefits of enhanced collaboration, improved speed, transparency and efficiency. Vizibl is built with input from specialists in procurement, innovation, strategy, marketing, manufacturing and finance, with a focus on building software that enables companies to create more valuable relationships with their partners.
vizibl.co

Written by: Eman Abouzeid, Global Procurement and Supply Chain Professional The theory of stakeholder relationships is an increasingly significant area…

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Written by: Eman Abouzeid, Global Procurement and Supply Chain Professional

The theory of stakeholder relationships is an increasingly significant area in the procurement and supply field. Identifying and defining who the stakeholders are is vitally important in any business scenario and equally so in procurement and supply, in order to perfectly understand how they are involved and what influence they can bring as a direct impact on the work and success of procurement and supply. 

The theory of stakeholder relationships is an increasingly significant area in the procurement and supply field. Identifying and defining who the stakeholders are is vitally important in any business scenario and equally so in procurement and supply, in order to perfectly understand how they are involved and what influence they can bring as a direct impact on the work and success of procurement and supply. 

A stakeholder is an individual or groups of people who have an interest in an organisation; these may be colleagues in other parts of the organisation, as well as people and groups outside the organisation. Stakeholder groups can be profiled into three different categories:

1. Internal stakeholders group; such as directors and senior managers, the technical/design function, manufacture/production/operations function, sales and marketing function, finance/admin function, storage and distribution/logistics function.

2. Connected stakeholders group; such as shareholders, end customers, intermediary customers (e.g. agents/distributors/retail outlets), suppliers, financial institutions/lenders.

3. External stakeholders group; such as government and regulatory bodies, pressure groups (e.g. Greenpeace), interest groups (e.g. consumer associations and trade unions), community and society at large.

Why is stakeholder profiling important?

It is worth taking the time to profile your stakeholder groups for these reasons:

1. Decision Making: profiling provides an insight into how much influence stakeholders have over decisions. Moreover, it helps you to allow time for responses while working with stakeholders who tend to be slow to act.

2. Communication: profiling helps you to identify the best way to share the features and benefits of your products and services. In addition, it enables you to include stakeholders’ needs in a communication strategy.

3. Understanding: profiling enables you to be aware of what stakeholders’ needs, wishes and priorities are, also it makes it easier to keep track of changing needs and requirements, and it helps you to see the market from stakeholders’ points of view. Likewise, a clear understanding of your stakeholders can help you to deliver more acceptable solutions that more closely fit their needs.

Approaches followed to build rapport with internal and external stakeholders:

Effective communication with stakeholders in any project or business relationship is important as there needs to be an exchange of information between the parties. People will be engaged at various stages in the process and any communication blockages may result in incorrect assumptions and decisions.

Considerably, it is important for the organisation and stakeholders to get to know each other and understand each others’ motivations. This helps to build a relationship where each party is happy to deal with the other, and then, eventually, learn to trust one another. Trust is established when each side has shown themselves to be reliable, consistent, and able to keep promises.

Building rapport with internal stakeholders:

In a business, everyone needs to feel part of the same team and that they are all working towards achieving a common goal. If management do not communicate their expectations to everyone then staff or whole department may go in different directions and lose track of the organisation’s overall goals.

Internal stakeholders feel more engaged with the business if they are kept informed of where the business is heading and what its significant aims and achievements are.

Building rapport with external stakeholders:

Building rapport with external stakeholders takes a little more effort as they are not involved directly with what is going on in the business.

It is vitally important to keep external stakeholders updated with the business’ products and services, goals and achievements. They do not need to know the details of how the business runs, but they do need to understand the aims of the business.

Key techniques and strategies to develop, maintain, and improve relationships with your internal and external stakeholders to promote an effective procurement and supply function:

Having established a connection with stakeholders, to ensure future success you must build a trusting and lasting relationship with them. Whoever they are, whether senior to you or outside your organisation, you can use similar key techniques to help you strengthen these relationships:

1. Be honest and open: being honest and open with stakeholders makes them more likely to be the same with you. If you need help, ask for it. Stakeholders will appreciate your honesty and value the opportunity to assist before a situation escalates.

2. Be proactive: dealing with risks and issues straight away helps you to spot challenges before they become a problem. You cannot control what crops up but you can control how to respond.

3. Be positive: no matter the challenges in your relationship with stakeholders, remaining confident that you will find a solution helps solutions to be found.

4. Listen to others: make an effort to engage with your stakeholders and listen to what they have to say. Understand others’ points of view before you try to get them to understand yours.

5. Have empathy: gain a clear understanding of the stakeholders’ needs and wants. How would you react if you were in their position? – look for a solution that will benefit all parties (win-win).

6. Set a good example: build trust and respect and aim to be professional. It takes a lot to build a reputation, but it can be lost very quickly.

Maintaining relationships with stakeholders:

The better your relationships with your stakeholders are, the more likely it is that your will be able to overcome challenges as they arise.

Involve stakeholders: Do not lose sight of your stakeholders over time. You built good relationships at the outset and it is easy, under the pressure of work, to forget to maintain those relationships. Maintain regular contact and keep the communication channel open so the stakeholders can also contact you.

Keep your word: Maintain truth and honesty throughout the relationship. You are accountable for what you are responsible for. If you say you are going to do something, then do it. If the stakeholder feels you are not keeping your word they will begin to lose respect for you and feel that you do not respect them.

Keep an open mind: Challenges will happen so you need to consider all options when trying to resolve an issue. Be open to the other person’s input – it may be the solution you seek.

Address issues as they arise: Often issues are side-lined in the hope that they may resolve themselves miraculously, but they usually do not! Deal with them straight away, discuss them, agree on a course of action, learn any lessons and move on. The relationship will be stronger as a result.

Improving relationships with stakeholders:

Occasionally, you will encounter stakeholders with whom you find it difficult to develop a good relationship. There may also be times when a previously good relationship becomes less successful. In these situations, it is important to maintain a professional attitude toward the relationship.

Additionally, you can make a renewed effort to get to know and understand the person. Try to uncover what resistance there is, and why they are behaving as they are. There may well be a simple issue that can be easily resolved.

In conclusion:

Within an organisation, and between the organisation and its suppliers and customers, there needs to be effective and transparent engagement and communication. Therefore, building rapport and developing relationships with all groups of stakeholders are considered the core of building valuable long-term business partnerships.

This week’s exclusive podcast features SAP Ariba’s Chief Digital Officer Dr. Marcell Vollmer who examines the integral elements to a…

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This week’s exclusive podcast features SAP Ariba’s Chief Digital Officer Dr. Marcell Vollmer who examines the integral elements to a successful procurement transformation and how it aligns with, and helps steer, a company’s strategic aims

Procurement is undergoing a revolution. No longer a reactive back-office function, designed to keep costs down, procurement is evolving into a vital, strategic aid that provides the c-suite with extensive insights and forecasts that affect the entire business. The chief procurement officer is now a vital cog in the corporate hierarchy who helps to drive value and to steer the business forward.

With any revolution, there are revolutionaries, and SAP’s Chief Digital Officer, Marcell Vollmer is one such figure. Vollmer has helped to forge a new identity for the CPO during his time at SAP. Vollmer’s current role at SAP, the global advisory and strategy, is helping its clients define and execute digital transformation strategies, including the procurement and supply chain functions. “Digital transformation is about focusing on a vision for the future,” he explains.

So, where does a procurement transformation begin? “I think the most important thing for digital transformation is to focus on the structure, the organisation, the process side, and then finally on the systems,” Vollmer tells us, from his Munich office. “Oh, and don’t forget the people and the change management on the journey, who are key to the overall success.” It’s no surprise that many businesses are preparing for the future as everyone wants to understand, learn and adapt to a constantly shifting landscape. And although procurement is emerging into a progressive role, Vollmer is quick to point out the volatility of technological change. Our CEO Bill McDermott says: ‘Change has never moved as fast as now, and it will never move as slow as today.’”

“Part of my role is helping them to cluster a little bit and structure the agenda because the change is so fast. 50% of all the companies on the Fortune 500 list for the year 2000 are no longer on that list. The speed (of change) is tremendous. Change has never moved this fast, and it will never move this slowly again, and so everyone is currently concerned a little bit and wants to prepare for the future.”

Vollmer is passionate regarding the massive potential of strategy-driven procurement as part of an overall transformation and is very much engaged in client-facing work within the procurement space. “Purchasing was not necessarily seen as a value contributing function and was viewed as the operational side, transacting, getting what the business needs,” he tells us. “And this has fundamentally changed. Procurement today has a more important role in the business, to make procurement awesome.”

The user experience

The user experience is absolutely key amid a digital transformation. Modern procurement systems have provided CPOs and their teams with the tools to transform the operations and function of their department, but there’s more to making procurement than just the tools. “Everyone expects an ‘Apple easy’ or a ‘Google fast’ experience when you interact with a system,” Vollmer explains. “(Procurement) needs to be an awesome experience and it needs to have a great user experience, but it also needs to provide all the insights needed, that you can get from the spend data,” he explains. “You have to do the demand planning and aggregation to really get everything for the best possible price depending on the quality and timings you need. The golden time in procurement can be optimised and is a great experience for everyone engaging and interacting with the procurement function.”

Many procurement and supply chain strategists and consultants are seeing a massive sea-change in the CPO’s role, which is seen by many as a stepping stone into the role of CEO. This is something Vollmer also endorses. “Look at Tim Cook (CEO Apple); he was a chief supply chain officer,” says Marcell. “Procurement was reporting into his function, and what has he done? Not only is he now the CEO, but he has also contributed by inventing the Gorilla Glass for the iPhone to a great product experience. In the meantime, we have more than 2.2 billion iPhones sold. So, wow, there really is something that comes after procurement.”

Indeed, Vollmer was a CPO. And a chief operating officer. Currently, Vollmer is a chief digital officer. As Vollmer has demonstrated, procurement is evolving into a talent pool. “It’s a place where people want to work, because that’s my experience. When I talk to other CPOs, it is the most beautiful place you can be. You understand the business model and really know what the business is doing. You can see areas of the business that represent opportunities. ‘Oh, that’s an area where I want to be next in my career.’”

For procurement to fully transform the increasingly redundant perceptions it creates, it needs to work a little bit better on the marketing side, according to Vollmer. “Starting as a trainee buyer, to potentially make it to a CPO, is a model which will no longer exist in the future,” he explains. “The number one reason is that we are tending more towards project-based work, a gig economy, to use this term. Millennials and Generation Z want to get more experience. They are not necessarily saying, ‘I want to work for a great company and procurement is a good spot for me to start, and most likely end, my career.’”

Vollmer is clearly excited about the future and sees procurement sat at the forefront of business transformation. “We are at the very beginning of the fourth industrial revolution. We are also at the beginning of a lot of technologies and machine intelligence is the most disruptive technology. I believe that this is a time of change and we need to prepare ourselves. And I believe procurement will have a seat at the table of modern businesses. Artificial intelligence is changing the world in the same way the steam engine or electricity did. And machine learning is basically a part of artificial intelligence. What’s currently becoming part of the business is internet off syncs and connected devices, which are being implemented more and more on the business side. Everything is related to automation in a broader sense and to analytics, including big data and predictive analytics. But then also bridging it back to the machine intelligence; the prescriptive guidance, using not only descriptive information, not only predicting something based on historical data, but also using other sources like weather forecasts. We have seen, for example, that Ferrero was heavily impacted one year back, a little bit more than one year back, when the hazelnut was impacted by the dry weather. And this is really where you see the connection between the different technologies, being absolutely key.”

When it comes to procurement transformation it’s vital to have a vision. What is the future for your function? Vollmer has a very distinct notion of what that vision should be “And this is not limited to procurement,” Vollmer explains. “I would say that this is part of all discussions regarding the future of the back office. Therefore, the digital transformation starts with a vision. What do you really want to do with your function? How do you want to create value? On the procurement side, as in finance, HR, or IT, you can see what’s coming with cloud, with the hyperscalers, and the change in IT and how we consume software using cloud solutions. It’s a new business model. And therefore, I believe that you need to think about how you want to define the future for your function.”

A transformation is all well and good, but how do you create value? According to Vollmer, this follows on from the vision. “You start with the structure,” he explains. “Start with the organisational side. What do you want to do? Which functions might you need? Which functions do you have already and might get impacted by automation or by machine intelligence and other disruptive technologies? And therefore, derive from that; think about the process side. How can you really help the business to be faster, to have fewer hours in the different processes, to be predictive in what is needed and also manage risk and secure a sustainable supply chain. This will really drive value for your organisation.”

Connecting with internet offsyncs and certain parts of the production of the supply chain is definitely adding value. “When you see automation with robotic processes helping your transactional processes become more automated, you can see the next level of machine learning. So, it’s not only the robotics process automation, which is just comparing a with b, and then if b is correct, going to c, and then to d and so on. It is also learning, ‘Oh wow, there is a lot that is happening when I see this in d happening. Basically, here are the root causes and this is something that can be done, that is most likely happening, and can be already integrated.’”

Vollmer is a big fan of concrete use cases to get quick wins during transformative processes. “You are not joining a journey for the next two, three, five years. In the past, big IT implementations were lasting. I think that time is over. You need to be much faster today as the change is very rapid and you need to prepare yourself for it. A lot of people fear the change, the speed, and the disruption and what might come and how their jobs might get impacted. I always say: ‘Yes, there is a high risk that your job will be changing. But look back at the past 10 years. How many times has your job already changed?’ At the World Economic Forum in Davos, this January, it was reconfirmed that until 2022, artificial intelligence will create 58 million additional jobs. Disruptive technology will change your job, but on the other side it will also provide great new opportunities. So many new jobs are getting created and there will also be a big shift from task. So technical operational tasks might disappear, but strategic value-adding tasks might show up, including everything related to analytics.”

Change management

The biggest challenge of any transformation involves the people. Change management represents a massive cultural shift in the workplace and it’s vital you get it right. “I always say, don’t forget the people. Because we all know we have limitations in the team science we have today. Even as procurement creates hard savings for example, more people could potentially save more money. But is procurement in the situation where it can get new resources or new talent? Most likely not. Whatever you do, people are the most valuable assets in your organisation. So be careful in how you define and drive your transformation, because you need the people to be successful. No one is smart enough to run everything on her or his own. It’s a team approach and so think about the people.”

So, what makes for a good CPO? “A really good CPO, understands the business model and can collaborate with the right groups as a business partner to really create value and gets a seat at the table of the business by providing everything that is needed, including all the new innovative solutions or products the company can use to be successful in the future. It is also about creating and developing a great team, which can contribute and drive the value-generating activities. So, good leadership skills are absolutely mandatory. That’s what a CPO needs, to be successful in the future.”

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Read the latest issue here! Our cover star this month is SAP’s Dr. Marcell Vollmer, the global thought leader, who…

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Read the latest issue here!

Our cover star this month is SAP’s Dr. Marcell Vollmer, the global thought leader, who reveals how the ongoing transformation of procurement into a strategic value-adding role will see the function perform a pivotal role in the fourth industrial revolution…

So, where does a procurement transformation begin? “I think the most important thing for digital transformation, is to focus on the structure, the organisation, the process side, and then finally on the systems,” Vollmer tells us, from his Munich office. “Oh, and don’t forget the people at the end.” It’s no surprise that many businesses are preparing for the future as everyone wants to understand, learn and adapt to a constantly shifting landscape. And although procurement is emerging into a progressive role, Vollmer is quick to point out the volatility of technological change. “Our CEO Bill McDermott says: ‘Change has never moved as fast as now, and it will never move as slow as today.’”

Elsewhere, we talk to CIPS Mena’s Sam Achampong on procurement in the Middle East and North Africa and catch up with the organisers behind World Procurement Week about how this fast-growing series of events is establishing itself as a must-attend date in the diary. We also have an expert insight on keeping your stakeholders happy and list 5 top ‘procurement disruptors’ and events.

We hope you enjoy the issue!

This week is part two of a six-part supply chain master class with Frank Vorrath, Executive Partner Supply Chain at…

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This week is part two of a six-part supply chain master class with Frank Vorrath, Executive Partner Supply Chain at Gartner. Frank has years of experience working on the frontline of supply chain management, and this week he’s detailing the hidden potential of a strategy-driven supply chain… Listen now!

With procurement undergoing nothing short of a revolution right now, the brand-new CPOstrategy will keep you up to speed with…

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With procurement undergoing nothing short of a revolution right now, the brand-new CPOstrategy will keep you up to speed with all the latest insights and stories from the biggest names in this space. Each month, we will cover all aspects of procurement strategy and transformation as well as supply chain digitisation and management. CPOstrategy is from executive, for executive. Read the launch issue now!

Procurement is being transformed by new technologies, but people are the secret to success according to LEO Pharma’s Head of Operational Procurement, Martin Starcke in our cover story this month. Drug developer LEO Pharma is seeking to revolutionise its procurement right now through the deployment of a decentralised system. However, Starcke, believes that the digital transformation of procurement is about a lot more than software or computer services. “It’s fundamentally about people. I think implementing software, implementing the technology is around 10% of your effort,” he says.

We also have an exclusive interview with Frank Vorrath, Executive Partner for the Gartner CSCO and COO Service who talks about the importance of delivering real value to its clients.

Elsewhere, we speak to procurement consultancy Efficio who prompts the question: “Are procurement leaders feeling let down by technology?” We also detail the barriers to smart procurement technology and list the five top reasons why supply chain strategies fail and what to do about it. Plus, lots, lots more.

We hope you enjoy the issue!