Shining A Light On Indirect Category Strategies

A new survey seeks to shine a light on those indirect categories that for years have resided in the darkness. 

Procurement Leaders has just launched its latest category planning survey. This is a survey designed to gauge the views of leading category managers. The main focus is the predicted price changes for a range of indirects at the sub-category level, totalling 49 targeted markets.

Last year, the research found a number of dynamic changes in the behaviour of important categories, which provided valuable insights into markets that don’t tend to have a light shone upon them. 

Marketing, for instance, recovered in many economies last year but what we found was an anticipation of price drops. 

We also uncovered an interesting relationship between the balance of power within different categories and the way in which influence is used in buyer-supplier relationships. We found that, contrary to expectation, where buyers enjoyed strength in negotiations, this often resulted in more innovation from the supplier than price drops.

This suggests that many organisations are maturing into a value-oriented understanding of trading relationships. Buyers are starting to move away from their traditional focus on cost reductions and negotiated price drops to a broader range of measurements.

We hope this latest research will continue to track and show the ways in which procurement is developing. But, the key output of the report is consolidating a variety of highly complex and nebulous markets, and providing a key indicator for the future environment for category managers.

There are ample forecasts within direct categories. Commodity markets in particular enjoy a huge number of experts and analysts who provide regular insights into the markets. Even items relatively high in the value chain, such as cars, are watched by a panels of specialist observers.

Indirect categories, however, have relatively few benchmarks and tracking mechanisms to guide buyers in their buying and pricing decisions. As a consequence, Procurement Leaders has developed its annual Category Planning Guide to provide detailed market intelligence in this area.

If you would like to participate in the research please click here. 

Members of Procurement Leaders will be able to read the full report in September.

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Sustainability Offers Opportunities. Procurement Should Grab Them

Doing more on sustainability is not just about the feel-good factor, efforts here can make a significant impact on the bottom line. 

Sustainability efforts worldwide received a jolt recently from major players in the coffee industry. Nespresso, the coffee-making unit of Nestle, reported on progress in its Positive Cup sustainability programme, including investments to rebuild the coffee industry in Sudan and efforts to help coffee farmers in Columbia through a retirement savings plan. Additionally, the company’s agroforestry plan is introducing new trees to provide resilience to climate change.

Likewise, Starbucks announced further investments in its Global Farmer Fund Programme, which includes efforts to manage climate variables through agronomy, restoration, and infrastructure improvements, among other things.

Those programmes reflect good business strategy as well as good corporate citizenship.

Procurement should take note. Sustainability can produce big payoffs. A recent report by The Conference Board revealed that for companies developing sustainable products, revenue from those products grew at six times the rate of overall revenues. Indeed, revenue at some of those companies grew at an astounding rate. For example, at Kimberly-Clark, topline revenue from sustainable products from 2010 to 2013 grew 296% versus an overall corporate revenue growth of 7.6%. Part of the reason for such growth could be that, according to a Harvard Business Review report of a few years ago, sustainability is a major driver of innovation.

Procurement is, naturally, a key player in sustainability efforts through its management of the supply chain. As a recent Procurement Leaders report found, the function has integrated corporate social responsibility into its processes, even if only at the grass roots level. Procurement was a consideration in sustainability efforts by Biogen Idec that resulted in the company being named the world’s most sustainable company in 2015 by Toronto-based media company Corporate Knights, according to a company spokesperson, and will play a greater role in the future. Other US companies getting high marks for sustainability in a different report (The RobecoSAM Sustainability Yearbook) were Alcoa, Ball Corp., and Wyndham Worldwide.

Procurement can do more though, as the Procurement Leaders report suggested. For example, it can push CSR up the business agenda by highlighting opportunities in the supply chain. Given the potential for profit, that effort alone could increase the value the function provides to the organization.

Members can read the full Procurement Leaders sustainability report here. 

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Innovative Solutions Needed For Future Office Requirements

Office space demands are changing and for procurement that means thinking of new solutions.

Professional services firm PwC recently predicted that by 2022 the majority of businesses will allow their employees to work remotely through different cloud technologies. This rise in remote working as well as developments in cloud computing and the global economic recovery is beginning to shape the future of the commercial real estate market.

Only 14% of UK employees expressed a desire to work in a traditional office based environment in the future, according to research by PwC. Therefore, in order to remain competitive and attract the best talent businesses will have to adopt innovative and flexible workplace solutions, such as serviced offices.

In London alone, the serviced office property market has increased by 67% over the last decade, according to research by Deloitte. Covering approximately five million square feet of central London, a 21% increase over the previous 10 years. This significant growth highlights the increasing attractiveness and demand for serviced offices.

Flexibility is a key differentiator of serviced offices as they provide the opportunity for companies to adjust the type and amount of office space required for their current and future business needs.

Fast growing small to medium sized companies, in particular media and technology firms, are leading the trend for the flexibility associated with serviced office leases as they are often unable to accurately predict their future growth and employment rates.

By taking advantage of short-term leases of serviced offices, procurement can help their businesses add value and manage their real estate costs by leasing only the required amount office space. Ultimately, reducing the possibility of potentially unused or underutilised desk space that can come with long-term fixed office leases.

The development of serviced office space is predicted not only to continue to grow in London but in other locations worldwide. Businesses expanding into emerging markets will increasingly adopt serviced office leases due to its unique nature and associated low risks and low costs compared with longer term options.

If they are not already doing so, both developers and landlords will need to effectively respond to the market’s demands for this type of flexible working option in order to remain competitive and grow their market presence.

To find out more about commercial property leasing market and how procurement can add value to their business, please click here to download a snapshot of the latest Procurement Leaders Property Leasing report. 

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Don't Get Caught Out By Local Development Rules

Adrian Chamberlain, chief executive of Achilles, warns of the dangers of ignoring local content development rules and highlights how leading companies are working together to meet the challenge. 

Amid crashes in both the price of oil and other key commodities, multinational firms are increasingly turning their attention towards emerging markets – countries which are home to a wealth of untapped natural resources and new business opportunities.

But with increasing global opportunity comes increasing risk, as scores of new territories introduce a raft of new local content development rules – where governments introduce strict criteria around the employment of local people, provision of training and investment in infrastructure. The consequences of non-compliance are potentially severe, with companies in extractives industries – such as oil and gas and mining - at risk of losing exploration and operating licences if they fail to deliver.

Local content development is an important step forward in creating shared value from contracts. But our belief is that industries will have to start thinking about it now in order to get up to speed with the new rules. 

Local content development rules carry a requirement for firms to have accurate supplier data. For example, the Broad-Based Black Economic Empowerment (B-BBEE) Act in South Africa includes a requirement to report on the number of black and women-owned SMEs within supply chains. As a consequence, global firms have to have an accurate picture of their supplier base – with information on supplier diversity, as well as traditional company particulars and compliance and performance metrics.

Yet many global firms still have a void of information about their suppliers.

In a market survey by IFF, 45% of operators in the mining and oil and gas sectors admitted they were not confident that their data on suppliers was accurate.  

Further, global corporations face an additional challenge – because centralised, ‘one size fits all’ supplier management programmes will not have the required flexibility to accommodate the plethora of regional laws, regulations and language requirements.

The smartest businesses are working to implement a three-step programme to tackle local content development. First they are introducing a standardised pre-qualification questionnaire outlining clearly the business critical standards required of all suppliers, wherever in the world they are based.

Next they are using a flexible and configurable system which can capture region-specific details – such as the number of black and women-owned SMEs.

Finally, they are setting aside any perceived notions of ‘competition’ in collecting mandatory supplier information.

We see successful businesses working together in collaborative communities – working together to collect non-commercial pre-qualification information from suppliers in all geographies. This enables them to quickly access a ‘pool’ of credible and reputable suppliers, while adhering to local content requirements – wherever in the world they are operating.

Adrian Chamberlain is chief executive of Achilles, which works on behalf of 300 large oil, gas and mining firms across the world to manage information about more than 20,000 suppliers.

This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content. 

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Help Your Counterparts: Be A Numbers Person

It’s not an exercise for the faint of heart. It takes a lot of work. But, it’s the kind of work all procurement professionals should take the lead in doing, in collaboration with their counterparts.

John Biagioni is a self-professed "numbers guy". He has to be. As president of Dynisco, a major company that manufactures materials-testing equipment and extrusion-control monitors for the highly competitive plastics industry, he can’t let emotion and impulse dictate his decisions. And his staff feels the same way, especially Kevin Dailida, senior director for supply chain and operations, and Matt Miles, DFMA (design for manufacturing and assembly) and value engineering manager.

Together, they lead efforts to quantify as much as possible about their manufacturing operations to ensure they’re building to the highest quality at the lowest cost. They recently described their internal processes at the Boothroyd Dewhurst DFMA conference in Rhode Island. There are some interesting lessons for manufacturing procurement in what they had to say.

For example, they talked about their process for “should costing” a product before proceeding to manufacturing. They begin, they said, by breaking down the cost components, including raw material, transportation, direct labor, indirect labor, scrap, productivity-enhancing technologies, overhead, energy, regulations, and other relevant components.

If that’s all they did, they would be taking a giant step toward understanding their costs. But they go further. They build a quantitative model of the costs they’ve identified so they can study how to reduce them, including the potential for using DFMA principles to adjust the product design and cut the number of parts. That gives them information they can use to negotiate and leverage spend with suppliers.

It also puts them on a path to developing the total landed cost--freight, insurance, duties, fuel surcharges –and total cost of ownership of the product--inventory carrying costs, packaging costs, the costs of poor quality, and a variety of risk costs– so they can truly analyze the potential for low-cost country sourcing.

It’s not an exercise for the faint of heart. It takes a lot of work. But, it’s the kind of work all procurement professionals should take the lead in doing, in collaboration with their counterparts in engineering, finance, and other functions. And as they do, they will not only streamline procurement operations and product development, they’ll be helping their companies be more profitable.

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Procurement and IT Must Collaborate Or They Will Waste The Value In Data

Anyone in the procurement industry who thinks we’re already living in some kind of golden age of data-based decision making is quite frankly deluded.

Anyone in the procurement industry who thinks we’re already living in some kind of golden age of data-based decision making is quite frankly deluded.

New research recently carried out by Rosslyn revealed that well over two thirds of day-to-day business decisions in the retail sector, for example, are still based on personal experience and human judgement instead of data-based facts.

And the fact that this is happening in industries where insight into supply and procurement data can play such a major role in reducing costs and mitigating risk is pretty incredible.

So why is this the case?

The problem is that there is still a fundamental disconnect between IT departments and business decision makers in how to draw value from data. Anywhere you go as a data consultant, you will still find IT still holds the key to most data treasure troves. Decision makers don’t have easy access to it, and often rely on the IT department to provide the insight they need to make strategic decisions; an unnecessarily elongated process.

It’s a classic case of cart before the horse, which unsurprisingly means data projects are not showing the expected return on investment. In fact, the research – conducted by OnePoll – found that 71% of corporate leaders recognise the commercial importance of data, but only 11% feel they have actually generated any financial value from it at all.

To overturn this situation, there is now an urgent need for business leaders and IT leaders to work together more effectively. Specifically, they need to collaborate to develop data strategies that define their technology purchases – not the other way around.

You only need to take a look at how the world’s most successful companies handle procurement and supply to see the value of this approach in practice. Take Apple, whose success is as attributable to its ability to fulfil incredible demand as it is to making products that people want to buy.

Apple’s secret is that it takes a business-led approach to managing an extremely complex web of suppliers. Led by CEO Tim Cook, who has the background and ability to run a supply chain, Apple has become exceptionally adept at understanding not just the direct suppliers it buys from, but also those who indirectly contribute components or services across the extended supply chain, even in the remotest parts of the world. This not only increases efficiency, but reduces the risk that the company will be caught up in allegations of exploiting workers through association to suppliers, for example.

Of course, choosing the right technology is still hugely important, especially now that data analytics technologies are improving all the time. Cloud, in particular, is offering up new ways to achieve complete supply chain visibility more quickly and effectively than ever before. In a matter of hours, you can put data in the hands of those that understand the challenges around procurement so they can analyse spending, supplier performance, and even the best time to pay suppliers, all on a single platform.

With procurement playing an ever more important role in the competiveness of a business, ignoring valuable data already within the organisation is ludicrous.


Charlie Clark is founder and CEO, Rosslyn Analytics.

This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.

 

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For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Next Gen Spend Analytics – Where Is The Technology Heading?

For many years, spend analytics software has been helping procurement departments to identify where cost savings can be made. But now we’re at a turning point where the technology is coming of age and reaching new levels of sophistication.

In this guest post, Procurement Leaders invites Tungsten Networks’ Stefan Foryszewski to give some insight into where technology will change the quality of decision-making in the procurement function.

Getting bang for your buck is one of the biggest priorities in procurement today, especially when supplier numbers grow ever larger. For many years, spend analytics software has been helping procurement departments to identify where cost savings can be made. But now we’re at a turning point where the technology is coming of age and reaching new levels of sophistication.

With the rise of e-Invoicing and e-Procurement, the amount and accuracy of data available to procurement teams is growing. When staff are based across multiple locations and in different departments it’s easy for duplications to occur. This means that teams can miss crucial opportunities to negotiate on consistent pricing and economies of scale, which could add up to hundreds of thousands of pounds. To give one example, recent analysis of UK’s NHS spending identified that while some trusts paid less than £4 for a box of needles, others paid £31.68. Clearly, if this was identified sooner, huge sums could be saved to the public purse.

We see spend analytics as a crucial area to reduce spend and improve efficiencies in procurement. As a result, we have recently partnered with Goldsmiths University in London to launch the Tungsten Centre for Intelligent Data Analytics. A dedicated team of academics will be charged with researching and developing our spend analysis technology, Tungsten Analytics, to enter the next realm and crucially, use state of the art artificial intelligence to do it.

Artificial intelligence

The term artificial intelligence conjures up associations with science fiction films, but in the next generation of spend analytics technology, it will help to solve a number of very contemporary problems.

Firstly, helping computers to understand and interpret written text. Machines can’t read so they need to find a way to identify semantics. For example, if two product descriptions are written in slightly different ways, – say ‘50ml syringe’ versus ‘syringe 50ml’ – how do they identify them?

Next, spend analytics will be further developed to learn functional equivalence. To use a car analogy, a human would know that a Ford and a Nissan are both brands of vehicle, but a computer wouldn’t necessarily. The next generation of spend analytics will see computers programmed to learn these subtle differences, so that better comparisons can be made.

Finally, we can expect the technology to evolve to achieve greater levels of trend analysis, using financial modelling to predict future pricing patterns and to assess supply chain risks.

Benefits for business

Intelligent computing and data analysis have uses across the business world and major global firms are sitting up and taking notice. Google and Facebook are investing heavily in research and development in these areas, while Amazon Web Services has set up a dedicated Machine Learning team. This is a growing industry that is being realised by business as a highly lucrative area.

But spend analysis is not just for big business. While large firms have more data to analyse, there is often more potential with small and medium sized businesses, which don’t already have efficient purchasing processes in place. When businesses grow rapidly, they can have a tendency to pull in suppliers from multiple directions and it can often take years for consolidation to take place.

Equally, for big businesses, even small cost savings add up to a big figure and significant benefits can be reaped from closely analysing spend. Identifying these cost savings is one of the biggest challenges facing procurement teams today, but with technology developing quickly to assist with these decisions, help is at hand.

Stefan Foryszewski is executive vice president at Tungsten Network.

This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.

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For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Looking For Answers On Regulatory Relief? Ask The Americans.

The burden of regulation is unlikely, almost certain not actually, to get any lighter. The real question is: how do procurement organisations in UK-regulated firms align approaches to third-party risk with the regulators’ fuzzy interpretation of concepts like ‘relationships’ and ‘criticality’?

The burden of regulation is unlikely, to say the least, to get any lighter. The real question is: how do procurement organisations in UK-regulated firms align approaches to third-party risk with the regulators’ fuzzy interpretation of concepts like ‘relationships’ and ‘criticality’?

It was this dilemma which framed much of last week’s debate, in which representatives form the UK-based financial services procurement community gathered in the heart of London’s City to talk about third-party risk. The event, hosted in partnership with Ariba, was engaging, revealing and, perhaps unsurprisingly, regulatory uncertainty was a dominant theme. 

So, how many tiers in any one category’s supply chain does the regulator look, for instance, when determining where accountability starts and stops with the firm? And how far does a supplier-relationship have to penetrate the organisation before it is deemed critical, and is this different across the various categories of spend?

What financial institutions under the supervision of regulators the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) must come to terms with, experienced attendees reflected, is that these questions will never be answered in any definitive way.

Firms are now well aware that when an operation is outsourced, the responsibility for the safety and soundness of that operation is not. The challenge for UK-regulated institutions arises out of the guidance, or principles-based, approach adopted by the official bodies. Effectively, what this approach means is that firms looking for targeted, prescriptive advice from the regulators are going to be disappointed.

Officials work on whatever they saw last and if it trumps what they saw before, it then becomes best-in-class. You can imagine how frustrating a field that is in which to play, and there is a feeling, certainly one that was expressed in these discussions in London, that being told exactly what compliant looks like would be advantageous.

The obvious question, then, is how do you then go about demonstrating compliance? It clearly creates a challenge.

One approach beginning to be used by financial companies with global operations is to take US regulator the Office for the Comptroller of the Currency’s (OCC) standards - understood to be far more explicit than UK or other international equivalents - as a baseline for global entities - a kind of common denominator approach.

Under the rules, among other things, firms are enjoined to:

• Assess the complexity of the arrangement, such as the volume of activity, potential for subcontractors, the technology needed, and the likely degree of foreign-based third-party support;

• Assess the complexity of the arrangement, such as the volume of activity, potential for subcontractors, the technology needed, and the likely degree of foreign-based third-party support; and

• Consider the bank’s contingency plans in the event the bank needs to transition the activity to another third party or bring it in-house.
  
  

The Industry Intelligence Channel for financial services is a new intelligence and collaboration service dedicated to your unique, sector-specific procurement challenges. This new channel provides deep category and strategy expertise, market intelligence and analysis designed to inform planning and best practice for those in the FS sector.

For existing Procurement Leaders members interested in this service, contact Joanna Nightingale at: j.nightingale@procurementleaders.com

For non-Procurement Leaders members, contact Andrew Deakin at: a.deakin@procurementleaders.com

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

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For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Proving Value Is A Constant Fight. Others Fight It Too.

Let’s face it: As one CPO at a recent Procurement Leaders Roundtable commented, “few outsiders like us.” No wonder some in the function get a little defensive at times.

"They make us perform tasks we dislike."

"They prevent us from doing what we want."

"They focus too much on administrivia."

 

Do these sound familiar? They should. The words and sentiments could have come from any formal or even informal gripe session about procurement.

Or, how about this: “They can’t communicate with other groups.” You may have heard your peers say that about your staff.

Let’s face it: As one CPO at a recent Procurement Leaders Roundtable commented, “few outsiders like us.” No wonder some in the function get a little defensive at times.

But here’s the thing: Except for the quote from the roundtable, none of those other statements refer to procurement. The first three–about unpleasant tasks, roadblocks to performance, and administrative trivia–reflect complaints business people make about Human Resources.

 

The comment about lack of communications skills: That came from a study about attitudes toward accounting and finance professionals.

Yes, there are plenty of misconceptions about procurement, and, let’s be honest, a few complaints that are valid. As Carlos Alvarenga of Ernst & Young has written on this website, there are people in the function that are focused solely on price and consider other factors meaningless.

But procurement is not alone in coming under fire from others in the organization. There are misconceptions about other functions too. Interestingly, the way to correct the misconceptions are often the same for all functions.

For example, among the recommendations for HR offered by Peter Cappelli of the University of Pennsylvania Wharton School: Show why the issues you address matter to the business, and demonstrate that you actually understand the business. As for finance, Kathy Hoffelder of CFO Magazine, suggests accountants and others focus on developing the soft skills required for getting their message across.

Cappelli and Hoffelder could just as well be making their recommendations to procurement.

There are, of course, many other traits that procurement professionals will have to develop to raise the recognition of their value. One is to understand that proving value may well be a constant battle. That’s why Laks Natarajan, CPO at Marsh & McLennan, suggests that procurement professionals be tenacious, but know how to manage their boundaries so they can challenge the status quo in a respectable way. That’s advice well worth taking.

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The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

The Rise Of Trust (And Speed) In Supplier Enablement

In this guest post, Procurement Leaders invites Coupa’s Adam Alphin to look at the future of supplier enablement. Alphin will be on the panel on the upcoming webinar ’eInvoicing and suppliers: Visibility, control & trust’ on Tuesday 30th June. You can register here to take part in the broadcast. 

You can also register for a free e-book on Enabling The Supply Base here. 


In the last 15 years there has been much digital ink spilled on how best to enable suppliers on leading S2P platforms. Here’s why: it was hard.

In the first wave of solutions, providers couldn’t get past the monetization potential of all those suppliers. So they charged suppliers to participate under the guise of ‘creating value for suppliers too!’ This created cost and contract hurdles their customers had to get over on top of all the change management, communication, and supplier training that needed to happen. The net result was enabling 20-30% of suppliers. They may have represented 70-80% of spend, but only 20% of the real process cost of doing business with their supply base. The most successful supplier enablement projects were led by the world’s largest companies that didn’t mind enforcing enablement mandates. That works with the culture of some very large companies, but for many it does not.

Good news – it doesn’t have to be so hard any more. Companies like Coupa are executing very quickly on a different worldview. We see a world where suppliers have choices for how they collaborate and transact with their customers. One where they can align those options with the way they do business. If suppliers want to use a web portal – great – here’s a web portal tool for you. You don’t want to bother with a portal? OK – acknowledge, comment on, or flip into an invoice right from the PO email. Prefer to just email in your invoices right from your invoicing system? OK – send it to a central email address, we’ll read it and ask you to confirm we got it right. We call it the Coupa Open Business Network and we have a big goal: Borderless Commerce and meaningful collaboration for all our customer’s trading partners on day 1 with our platform.

And our customers are beginning to see some fascinating ‘collateral benefits’ to this approach. Simply put, it’s injected trust into a conversation that previously felt like buyers were cornering or holding hostage their supply base. This trust has resulted in higher engagement, much higher participation in e-invoicing, and get this…suppliers becoming change agents within our customers organizations! We believe the conversation must change from “Here is a web portal that you’ll be charged to use, you’re now required to use it to be our supplier” to “Here are our business objectives we think are in both of our best interest, here are a series of tools we’re providing (for free!) so we can help each other achieve those objectives.”

That transparency has developed trust. That trust is beginning to recruit large groups of suppliers who are interacting with our customers end-users every day and helping spread the word on their business objectives. So with this new world order in mind, here’s what we’re seeing as best practices for supplier engagement:

1. Start with a Plan

This may seem overly simple – but you’d be surprised how many companies start an implementation or supplier enablement project with no clear success metrics. What are you really trying to do? Measure it. Be specific. Some common ones:

• 80% spend on contract
• Increase PO-backed transactions by X
• Get to 90+% e-invoicing in X amount of time.
• Decrease Non-PO invoice approval times by X

2. Get the correct supplier email address 

You’d be surprised how few Fortune 500 companies have good, transaction-appropriate email addresses in their Vendor master. There are many BPO providers that can help you go acquire these email addresses, and it’s worth every penny. One of our major design principles is to embrace email as a common denominator for transactional collaboration. Getting the correct supplier email address is like rocket fuel for your supplier enablement efforts.

3. Be Transparent with your suppliers

Tell them what you’re trying to do and how you need them to help you get there. You’re their customer; if they’re good suppliers they’ll help you get there. And they may have some good ideas that you didn’t think about. At our recent Coupa Inspire event I listened to a fascinating panel discussion about how Suppliers are an important source of innovation that can help push procurement from a tactical function to a strategic function. It’s true! Your suppliers are full of bright people who are interacting with all of your end-users every day. They can and will help you achieve your goals, let them.

4. Clearly communicate all the supplier’s options

• Be clear on the different ways your suppliers can transact and collaborate with you, and the implications of each option. Let them know you’re giving them choices.
• Be clear on all training opportunities for suppliers. A < 3 minute training video has shown to be the most successful for us.
• Be clear on deadlines on when suppliers need to respond with required information.

           5.  Manage any communication campaign with modern email marketing tools

There are fantastic freemium tools out there that can help you manage a communication campaign. These allow you to:

• Design better communications
• Track progress to your goals
• Figure out which suppliers are engaging with your communication, and which are not.
• Build and schedule follow-up messages
• Prioritize phone follow-ups with those who are most engaged. 

6. Go Big

Ever heard of the wave approach? We don’t believe in it. To be fair – that may not be the total truth. We believe in segmenting your suppliers and making recommendations on how they’ll transact and collaborate, and tailoring your communications to them, but gone are the days that you only have your fully integrated suppliers connected at Go-Live. You may need to break the communication and training down into groups, but gone are the days of trying to force thousands of suppliers into a portal-only strategy. In this new world an email is all you need to begin transacting both POs and Invoices and engaging in meaningful collaboration.

So take a look at this new world order, and consider some of these tips to leverage the growing trust in the marketplace. And imagine a world where borderless commerce and meaningful collaboration for all your trading partners really does happen on day one.

It’s not very far off…trust me.


Adam Alphin is director, supplier enablement services, Coupa. 

This contributed article has been written by a guest writer at the invitation of Procurement Leaders. This is published in support of the Enabling The Supply Base Campaign, published in partnership with Coupa.

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The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Contact Centres – An Overlooked Value Opportunity

Contact centres of the past used to belong to the company’s support division and provide answers to the customers’ questions, whenever available and at the expense of the customers’ patience. Nowadays, the business decisions belong to the customers.

Contact centres of the past used to belong to the company’s support division and provide answers to the customers’ questions, whenever available and at the expense of the customers’ patience. Nowadays, though customers are more empowered to make decisions than ever, contact centres are often wrongly seen as an unhelpful cost. 

The ’era of the customer’ was reached through fierce competition and constant modernisation and it stands that businesses that are serious about their customers invest in resources to answer their questions. Innovative ideas and quality products shape the strategy of the market but how do companies differentiate themselves in a room full of achievers? How do they get their piece of the pie when the stakes are that high? Through quality customer service! That is where Customer Relationship Management (CRM) specialists come in.

CRMs provide customer support whenever possible and at the expense of the client. The former is not even an option anymore – 24/7 service is a quality standard, ‘business hours only’ can be afforded only by the most confident of the players. The expenses, however, have become the main differentiator of the contact centres.

How to win more clients without losing a strategic profit margin? One of the most well-recognised routes is outsourcing. Business Process Outsourcing (BPO) professionals save money on the difference in salary levels between different countries. The Philippines and India, both having educated English-speaking population in abundance, are still well below American and European salaries, despite rapid development. However, many businesses have found that outsourcing their CRM can result in a loss of value, if their service providers aren’t able to maintain the customer experience they are after. 

Another idea is to provide the pricing strategy that would benefit both clients and suppliers. For example, if you need to find a contact centre for your new smartphone users but want to pay just a fixed hourly rate, then your CRM provider would be disappointed. Smartphones tend to be upgraded, new apps tend to be released and marketing campaigns usually kick in a few months later to remind us about the latest offers; who wants to adapt to all these changes for free? Instead, CRMs would ask you to include a clause that increases their fee in line with your customers’ calls.

Or, imagine, a client wants to improve their customer service but they’re only paying a pay-per-transaction rate. It would mean the contact centre will get more money with every answered call. High quality service would be hard to achieve if agents are on a time quota. That’s when minimum required CSat (Customer Satisfaction) level would be handy.

Technology and innovation can play a big role in saving contact centres some money, as cloud-based infrastructure and homeworking allow less spending on the offices and more on efficiency. Social networks, web chats and emails are another way of minimising costs and supporting the customers in the most convenient fashion.

Mobile technologies are on the rise, so why the customer service should be left behind? Omni-channel approach, or providing service whenever, wherever and across all platforms, is becoming a benchmark of the contact centre industry. And don’t forget employee satisfaction. Staff is the key element of any contact centre, so when they’re happy the customers are happy. And that is the ultimate goal.

To find out more about the procurement of CRM services, please click here to download a snapshot of the latest Procurement Leaders Contact Centres report.

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The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Why Internet Of Things Will Revolutionise Healthcare Costs

The rewards for procurement professionals that successfully leverage IoT are significant. If companies can effectively identify and manage their costs and mitigate risk they will be able to build corporate resilience. 

Arguably the most hyped technology around, the Internet of Things (IoT) is set to bring revolutionary change spanning every possible industry and the opportunities will be endless, especially for the healthcare industry.

But what exactly is IoT? Put simply it is a network of device connections, capturing and sharing real-time data via a cloud based platform through the use of sensors. However the concept is not a new one, the long anticipated IoT revolution is already underway.

IoT has huge potential to radically improve the health of the global population, proving very promising for the industry in terms of how healthcare is delivered and priced.

Although, the healthcare industry has been relatively slow at adopting the possibilities of IoT, some real-life developments are already in action;

• Wearable technology; which monitors patient vital signs and activity levels.
• The automated pill bottle; alerts patient and healthcare providers when medication is not taken.

The popularity and demand for this type of technology is rapidly increasing as healthcare providers, insurers and buyers collaborate and look for solutions to provide affordable and accessible healthcare whilst reducing unsustainably high costs.

Benefits for healthcare insurance providers

IoT is set to impact the way health insurers operate. Insurers could offer financial incentives to policyholders when using IoT devices which monitor the policyholder’s health, meaning more active wearers could receive lower premiums.

Demographic changes impact the underwriting process, therefore IoT will ultimately redefine existing underwriting processes and pricing mechanisms as more personalised risk assessment will be enabled, meaning premiums could eventually fluctuate similar to utility bills.

Benefits for procurement

As an employer, employee health benefits are often a substantial cost component alongside salaries. Under government and compliance regulations such as the Affordable Care Act, employers are being forced into re-examining the way they provide employees with healthcare cover. As a result employers are seeking innovative solutions to help them control costs.

Buyers will be more able to negotiate insurance deals and avoid increase in long term medical insurance premiums as insurance providers will offer more flexible and more personalised cover. 

The challenges

Expanding popularity of IoT techonology within the healthcare industry comes with its own risks and challenges and as health data becomes more accessible; data privacy and protection needs to be top priority for those wishing to take advantage of IoT.

In many ways effectively utilising IoT is a win-win for all parties involved. IoT technology has the potential to enable faster, more efficient and more profitable healthcare.

The rewards for procurement professionals that successfully leverage IoT are significant. If companies can effectively identify and manage their costs and mitigate risk they will be able to build corporate resilience. It can be guaranteed that companies who fail to utilise the combination of IoT with healthcare will risk falling behind their competition.

To find out more about procurement of healthcare, please click here to download a snapshot of the latest Procurement Leaders Healthcare report. 

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For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Time For Asia-Pacific Leaders To Get Wider Recognition

For all the attention placed on the economies of China, India, Japan, Korea and their neighbours, I’d suggest that western business is still learning about the east. And perhaps there’s more to learn than gets recognised.

For all the attention placed on the economies of China, India, Japan, Korea and their neighbours, I’d suggest that western business is still learning about the east. And perhaps there’s more to learn than gets recognised.

Procurement is one of the best examples of where smart, commercially astute, entrepreneurial individuals are able to take on projects that upend expectations and do things in a completely different way. So while some businesses in the growing economies in Asia are looking to Western business for roadmaps and benchmarks, that paradigm does no favours to the lessons that come from the specific challenges of various markets in the Asia-Pacific region. These are not less relevant or instructive because the economies they operate in present different scenarios to their overseas counterparts.

Here’s three cases why the activities of the procurement community in Asia-Pacific deserve more attention:

Frontier sourcing and supplier management

Global businesses need strategies to find, engage and manage suppliers in Asia-Pacific. They present unique challenges; unfamiliar regulatory environments, compliance issues, lack of supply chain visibility, etc. But they are a vital component of global business and learning how to leverage their abilities and minimise risk is key to a global sourcing strategy.

Companies of the future

Global business has had to get comfortable with the growing presence of Asian companies in lists of the largest and most influential enterprises. It would be foolish to suggest that these dynamic businesses haven’t developed very successful procurement methods. How they do business will change the world of commerce and it behooves the smart executive to stay in touch with these shifts.

Commercial savvy is the same everywhere
Whether it’s building a team from scratch, overhauling outdated processes or adapting to huge shifts in the supply base, there’s no question that some of the most ground-breaking and urgent work that functions do happens outside of those elite teams controlling huge amounts of spend and resources. In the quest to be lean, influential and inventive, the geography of the business is merely the background on which teams have to operate, rather than a factor, which defines how effective they are.

Which brings me to this years Asia-Pacific Awards, which have been established to recognise the best procurement initiatives, individuals and companies in the Asia-Pacific region.

The Awards will:

• Celebrate excellence within the procurement sector and your organisation
• Showcase best practice amongst procurement individuals and teams
• Reward procurement innovation within the Asia Pacific region

The deadline for entries is fast approaching (23:00 GMT, Friday 3^rd July) after which they will be judged by an esteemed panel of senior procurement leaders and innovators from companies such as Etihad Airways, Unilever and Hitachi. There is a choice of 6 categories to enter: Procurement Excellence Award, Procurement Leader Awards, Cross-Functional Collaboration Award, Procurement Team Award, Transformation Award, External Collaboration Award. It is free to enter the Awards.

For more information on the Awards and to enter, visit: http://ift.tt/1GwWM92

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

 

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This content was assembled for you by the YQ Matrix platform

The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Time For Asia-Pacific Leaders To Show Off

For all the attention placed on the economies of China, India, Japan, Korea and their neighbours, I’d suggest that western business is still learning about the east. And perhaps there’s more to learn than gets recognised.

For all the attention placed on the economies of China, India, Japan, Korea and their neighbours, I’d suggest that western business is still learning about the east. And perhaps there’s more to learn than gets recognised.

Procurement is one of the best examples of where smart, commercially astute, entrepreneurial individuals are able to take on projects that upend expectations and do things in a completely different way. So while some businesses in the growing economies in Asia are looking to Western business for roadmaps and benchmarks, that paradigm does no favours to the lessons that come from the specific challenges of various markets in the Asia-Pacific region. These are not less relevant or instructive because the economies they operate in present different scenarios to their overseas counterparts.

Here’s three cases why the activities of the procurement community in Asia-Pacific deserve more attention:

Frontier sourcing and supplier management

Global businesses need strategies to find, engage and manage suppliers in Asia-Pacific. They present unique challenges; unfamiliar regulatory environments, compliance issues, lack of supply chain visibility, etc. But they are a vital component of global business and learning how to leverage their abilities and minimise risk is key to a global sourcing strategy.

Companies of the future

Global business has had to get comfortable with the growing presence of Asian companies in lists of the largest and most influential enterprises. It would be foolish to suggest that these dynamic businesses haven’t developed very successful procurement methods. How they do business will change the world of commerce and it behooves the smart executive to stay in touch with these shifts.

Commercial savvy is the same everywhere
Whether it’s building a team from scratch, overhauling outdated processes or adapting to huge shifts in the supply base, there’s no question that some of the most ground-breaking and urgent work that functions do happens outside of those elite teams controlling huge amounts of spend and resources. In the quest to be lean, influential and inventive, the geography of the business is merely the background on which teams have to operate, rather than a factor, which defines how effective they are.

Which brings me to this years Asia-Pacific Awards, which have been established to recognise the best procurement initiatives, individuals and companies in the Asia-Pacific region.

The Awards will:

• Celebrate excellence within the procurement sector and your organisation
• Showcase best practice amongst procurement individuals and teams
• Reward procurement innovation within the Asia Pacific region

The deadline for entries is fast approaching (23:00 GMT, Friday 3^rd July) after which they will be judged by an esteemed panel of senior procurement leaders and innovators from companies such as Etihad Airways, Unilever and Hitachi. There is a choice of 6 categories to enter: Procurement Excellence Award, Procurement Leader Awards, Cross-Functional Collaboration Award, Procurement Team Award, Transformation Award, External Collaboration Award. It is free to enter the Awards.

For more information on the Awards and to enter, visit: http://ift.tt/1GwWM92

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

 

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This content was assembled for you by the YQ Matrix platform

The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Pay Attention To Technology. Your Counterparts Are

Technology has actually been important to procurement transformation for more than two decades, and that importance continues to grow. Today, much of the buzz relates to so-called “big data,” as it should, since therein lies great potential for procurement to dramatically raise the value the function provides.

If there is anyone out there who doubts the importance of technology in procurement, recent news from Cisco should have been a wakeup call. The company announced that Rebecca Jacoby, formerly chief information officer, would become senior vice president of operations. Among her responsibilities: the company’s supply chain.

Analysts said that her appointment reflected the company’s increasing emphasis on technology, including technology for managing the supply chain.

Of course, few CPOs have doubts about the importance of technology. The 2015 Procurement Leaders Trends Report reveals that nearly 53% of respondents to the survey underlying the report plan to increase their investment in technology this year.

Technology has actually been important to procurement transformation for more than two decades, and that importance continues to grow. Today, much of the buzz relates to so-called ’big data,’ as it should, since therein lies great potential for procurement to dramatically raise the value the function provides.

But other data that provides spend visibility and eases procurement operations remains important too. You can’t know enough about your supply chain, as seems evident from a recent report by Reuters. The news agency said a lack of data about suppliers in Asia could make firms complicit in slavery without their even knowing it.

Technology also enables better compliance to contracts and to rules requiring use of suppliers already on an approval list. Daniel Ball, of Wax Digital, wrote on these pages that eSourcing platforms are one way of ensuring that the terms of a contract become hardwired into purchasing and wider business processes.

Finance is taking note of the importance of technology to procurement. CFO Magazine presented a webcast featuring Duncan Jones, principal analyst at consultancy Forrester, speaking about the importance to finance and procurement of making P2P systems easier to use. He also suggested that firms that allow employees to go to suppliers’ websites should tell those suppliers to delete any elements in their websites intended to up-sell customers so they will buy more.

One element of ease of use in technology is trust that the technology won’t lead to errors. One source of errors can come from the necessity to re-enter data from one system to another, say from an ERP system to a procurement system. Ariba recently announced in that regard that it had released a tighter integration with SAP for purchase of direct materials. Now, an RFQ within SAP can go directly to Ariba Sourcing so procurement can review the request without re-entering it and decide what action to take.

As much as technology has transformed procurement up to now, it is destined to be of even greater importance in the future, largely because of its own evolution. Flextronics CPO Tom Linton has written that the new technology ecosystem will include the Cloud, mobile devices, big data, and social and cognitive networks.

CPOs should be thinking about all those possibilities. Certainly, others in the firm are.

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This content was assembled for you by the YQ Matrix platform

The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Pay Attention To Technology. Your Counterparts Are.

Technology has actually been important to procurement transformation for more than two decades, and that importance continues to grow. Today, much of the buzz relates to so-called “big data,” as it should, since therein lies great potential for procurement to dramatically raise the value the function provides.

If there is anyone out there who doubts the importance of technology in procurement, recent news from Cisco should have been a wakeup call. The company announced that Rebecca Jacoby, formerly chief information officer, would become senior vice president of operations. Among her responsibilities: the company’s supply chain.

Analysts said that her appointment reflected the company’s increasing emphasis on technology, including technology for managing the supply chain.

Of course, few CPOs have doubts about the importance of technology. The 2015 Procurement Leaders Trends Report reveals that nearly 53% of respondents to the survey underlying the report plan to increase their investment in technology this year.

Technology has actually been important to procurement transformation for more than two decades, and that importance continues to grow. Today, much of the buzz relates to so-called ’big data,’ as it should, since therein lies great potential for procurement to dramatically raise the value the function provides.

But other data that provides spend visibility and eases procurement operations remains important too. You can’t know enough about your supply chain, as seems evident from a recent report by Reuters. The news agency said a lack of data about suppliers in Asia could make firms complicit in slavery without their even knowing it.

Technology also enables better compliance to contracts and to rules requiring use of suppliers already on an approval list. Daniel Ball, of Wax Digital, wrote on these pages that eSourcing platforms are one way of ensuring that the terms of a contract become hardwired into purchasing and wider business processes.

Finance is taking note of the importance of technology to procurement. CFO Magazine presented a webcast featuring Duncan Jones, principal analyst at consultancy Forrester, speaking about the importance to finance and procurement of making P2P systems easier to use. He also suggested that firms that allow employees to go to suppliers’ websites should tell those suppliers to delete any elements in their websites intended to up-sell customers so they will buy more.

One element of ease of use in technology is trust that the technology won’t lead to errors. One source of errors can come from the necessity to re-enter data from one system to another, say from an ERP system to a procurement system. Ariba recently announced in that regard that it had released a tighter integration with SAP for purchase of direct materials. Now, an RFQ within SAP can go directly to Ariba Sourcing so procurement can review the request without re-entering it and decide what action to take.

As much as technology has transformed procurement up to now, it is destined to be of even greater importance in the future, largely because of its own evolution. Flextronics CPO Tom Linton has written that the new technology ecosystem will include the Cloud, mobile devices, big data, and social and cognitive networks.

CPOs should be thinking about all those possibilities. Certainly, others in the firm are.

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The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Procurement Risks Being Limited By Its Own Core Skills

Procurement is changing rapidly and the big question is: whether the skillsets of procurement professionals are changing just as quickly?

Procurement is changing rapidly and the big question is whether the skillsets of procurement professionals are changing just as quickly?

With a third of procurement leaders members reporting being in the midst of a transformation projection, it’s a logical step to say that new projects, especially those which are aiming to achieve something that has never been achieved before, require something to be done differently and to do this well new skills are required.

Whether the project is related to eProcurement or enhancing procurement’s role internally, all of these projects can benefit from an internal assessment of talent capability, to ensure that each stage is deliverable. Still, this is easier than it sounds, which is why functions often come unstuck in delivering ambitious transformation efforts.

The people that got you where you are won’t necessarily get you where you’re going. With so many projects focused on innovation and new strategies focusing on both internal and external stakeholder management, the skills to insure these projects have measurable, demonstrable ROI are a necessity. Projects for example with ambitions such as to move away from a category-orientated procurement function, to one that is client orientated undeniable requires a different skill set to what’s gone before. 

Most CPOs will agree that a lack of negotiation skills is not the most pressing problem, to say the least, and is now seen as the core of many procurement professionals’ skill portfolio. This is because as function teams have spent years investing and honing where they perceived the greatest saving could be achieved, they became masters of contract negotiation.

Take the example of a newer strategy such as moving toward a client-orientated approach: this requires a completely different skillset from that of a traditional buyer or manager, both at a strategic and tactical level. Accordingly, procurement practitioners need to be able to sell the function to other areas of the business, including finance, to sell the value generation potential of the function and to promote the ways in which they can encourage innovation —soft skills, then, become crucial.

Where do teams get these new skillsets from? With around 60% of procurement using mentorship, it’s clear that there’s recognised advantages in passing those down.

But others are looking further afield, whether this is from internal secondments or external secondments to other partnered companies using staff exchange programs. Alternatively external training resources can often offer excellent specialised and structured training with defined outcomes and relevant skills (the Procurement Leader’s Academy is one such option). These sources can provide an injection of new skills, which the mentoring system so desperately needs.

Ensuring your procurement strategy runs parallel to the continued alignment of competencies within your procurement function and its objectives is key to being successful in achieving targets and retaining innovators.

The onus, now more than ever, is on CPOs to plan accordingly to have a talent pipeline in order that matches that of the transformation projects running simultaneously, or be faced with teams that do not have the ability to reach the lofty visions of the function’s future.

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

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The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Financial Services Focus 2015: Earning A Seat At The Table(s)

Savings, risk, CSR, talent. Advances in these areas may well be made, but they will fall on deaf, or worse no, ears if you fail to earn and then keep the so-called seat.

Without a doubt, this question of recognition, for me, is where the real debate lies.

As a topic of discussion, it speaks directly to the aspirational feeling evident in contemporary procurement discourse. It’s strategy. It’s the stuff we want to be talking about in moments of respite from the stuff we have to talk about. It gets to the heart of the modern strategic challenge, which is to elevate the function’s status to one of trusted advisor to stakeholders and the business.

Savings, risk, CSR, talent. Advances in these areas may well be made, but they will fall on deaf ears if you fail to earn and then keep the so-called seat.

So that’s why we talk about it, but what does it actually mean? It can appear a bit abstract.

At Procurement Leaders’ Financial Services Focus Day, held last week in New York, winning organisational influence featured as part of a lively three-pronged debate. So, naturally, the first question was: what table?

The question elicits different responses depending on who you ask, so the first thing to note is that it depends on governance structures. For many, though, they and their teams required seats at more than one table because of the way their stakeholders were structured —be it by geography, category or line of business— was more complex than simply having a board and then no influencers of consequence below. 

Despite the different scenarios that businesses saw here, it was agreed, that technology was key among the battlegrounds for the function in this sector, given the large share of spend commanded by the IT categories. Thinking about how you might arrive at a place where you’re able to bend the ear of the CIO, then, is a good place to start.

The next question is how. And this, for me, is where it gets interesting: it’s a question of talent, and of those ‘soft’ skills whose importance are now beginning to earn proper recognition. I don’t think anyone believes that a ‘silver bullet’ answer to this problem exists, and debate continues over what ‘right’ looks like in respect of the balance between these and the more explicit, technical capabilities.

One without the other is probably useless, and you’re not going to want your IT expert on schmoozing duty; just as those blessed with the gift of the gab are not who you want in the room when the tough, technical questions need answering.

Some farm the technical activity out to managed service providers, and look to develop strategic capabilities in-house. In a small team, this is probably the way to go, but those with a little more resource to play with typically like to maintain a more varied mix. In fact, it was agreed that having that deep expertise among your team and at your disposal was key among the ways procurement can prove its worth.

Finally, it’s about keeping the seat and the influence that your team earns. There’s not much point in striving to get there if you’re not committed to staying. So, what is the function bringing to the table? It’s a question of deploying and agreeing on aligned metrics; of what value procurement is delivering.

Savings will be at the top of the list, probably —most people agree that this is what gives procurement its voice in the first place— but savings are not infinite. Underneath must follow a simple, relatable set of metrics to focus the discussion on procurement’s real strategic deliverables. By relatable, we mean aligned with business strategy, and this comes from having an understanding of that business, of procurement’s internal customers, and what they are actually looking for from their relationship with the function. In that sense, financial services has more in common with sectors that have a much larger bill of materials than might be obvious at first glance. 

The Industry Intelligence Channel for financial services is a new intelligence and collaboration service dedicated to your unique, sector-specific procurement challenges. This new channel provides deep category and strategy expertise, market intelligence and analysis designed to inform planning and best practice for those in the FS sector.

For existing Procurement Leaders members interested in this service, contact Joanna Nightingale at: j.nightingale@procurementleaders.com 

For non-Procurement Leaders members, contact Andrew Deakin at: a.deakin@procurementleaders.com

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

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For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Why 'The Networked Economy' Is Bigger Than Software

Fresh on the heels of Ariba LIVE conferences in Las Vegas and Munich, Procurement Leaders’ Eva Milko looks at why the ’networked economy’ needs to be in procurement’s plans for the future. 

The future is here and it is connected. Two recent Ariba conferences gave me
 a glimpse into the transformation that
is occurring among supply chain and procurement organisations.

I would like to highlight a few ideas worth sharing: according to the experts, we are transitioning from the ‘internet economy’ to a ‘networked economy’, creating exponential hyper-connectivity among things that, up until now, were disconnected.

It is estimated that by 2020, there will
 be 75 billion connected devices, connecting 2.5 billion people on social networks, creating $65tn in global business moving around the globe. And it does not stop there. A Success Factors study highlights the fact that 83% of surveyed executives are using contingent workers in some shape or form, and depending on the research, by 2020, 40% to 50% of the entire world’s workforce will be contract or contingent staff.

The networked economy brings forth exponential acceleration of digital technologies. It connects ideas, people, businesses and machines to change the way business innovates, partnerships are redefined and society functions, not to mention the nature of life and work itself.

Most of us are not used to thinking in big, exponential numbers and up until now, we were not required to. But imagine what can be done in a world where everything is tracked and measured. Those more forward-facing companies are taking advantage of monetising these hidden capacities. The exciting part for me is that the future of work expands the formula for success.

What does this mean for procurement and supply chain professionals? Many CPOs in a recent study by CPO Rising, continue to quote their priorities as cost savings, process efficiencies, compliance and working capital. Some begin to discuss procurement-led innovation and supplier collaboration, while the focus on people and talent is also often on the forefront of the discussion.

What became clear at Ariba Live in Las Vegas this year
 is that it all starts with people: individuals 
who can think in exponential terms and who are comfortable with hyper connectivity; professionals who are capable of imagining and building connections across vast and diverse ecosystems, carefully crafting new webs of information, insights and ideas; people who are capable of not just retooling, but rebooting their careers multiple times over.

It is these people who will bring ideas on cost savings and process efficiencies. But, more importantly, it is these professionals who will have the skills and courage to take us beyond our current state and into the world of the networked economy.

You can read Eva Milko’s regular column in the latest issue of Procurement Leaders Magazine. Find out more here.

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

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The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

Where Category Management Falls Down (And How It Gets Up Again)

Category management may offer a huge boost for maturing functions, but it’s not without its challenges. By tapping into the experiences of peers who’ve been through some of these growth stages, teams can avoid some of the pitfalls of the process. 

It’s a common benchmark of the maturity of a procurement function: do you have category management? But there’s no silver bullet to engage stakeholders and increase value – category strategies are, instead, better thought of as a way of organising expertise in procurement to integrate more directly with relevant areas of spend. It’s a hugely valuable approach, but not without it’s challenges and it’s worth reflecting on where some of those problems, the kind which we hear of frequently from our community, occur and what we might do about them.

At Collaborate Live, a series of hosted sessions at the World Procurement Congress in London last month, delegates took on these challenges and it became clear that a handful of issues stood out above the rest. The session was an extension of the Procurement Leaders Collaborate discussion platform, with contributors to the online debate leading the tables.

The conflict between local and global agendas

On a global basis, category management can suffer from a broader lack of category expertise and a rigidity of approach across jurisdictions where the nature of the markets varies drastically. On the other hand, if strategies have no centrally defined principles and controls, they lose the leverage that global spend can bring and risk becoming fragmented in approach.

Jukka Ahvonen, head of supply at Finnish oil-technology firm Outotec, led a discussion about the conflict in global and local agendas and how procurement could bridge this gap. One of the key takeaways was the need to listen to the regions and provide the flexibility to operate, while ensuring the team has a diverse mix of backgrounds and cultures. Perhaps most important, however, was the need to maintain good communication – an area, it was suggested in which procurement teams should certainly look to invest.

Complex or untouchable categories

It’s one thing to control spend on staplers and quite another to tell a marketer who they can or can’t work with. Not that procurement would necessarily do that, but the perception that procurement is simply a bean counter or even an unnecessary interference and a risk to the value of a supplier relationship. A further problem: once savings in the categories that might be considered ‘low-hanging fruit’ dry up, it’s these areas of spend that move into focus.

Carmen Sabatini, senior procurement director at Ciena, noted in her discussion that a distrust of the knowledge that procurement has of these areas was a key hurdle to overcome. Procurement must gain credibility with these stakeholders by bringing market intelligence and knowledge to the table, while at the same time allaying any fears about empire building.

Lack of interest from the business

An issue closely related to the first two points, Tony Roberts, director of procurement at Lafarge Tarmac, led a discussion about how to gain stakeholder support and what procurement should do to ensure that stakeholders are more engaged.

The importance of procurement speaking ‘business language’ rather than using procurement terms to help build understanding of the function across the wider business, was not lost on participants. For example, category management is a key tool for managing spend, but stakeholders don’t understand what this actually means. Conflict with stakeholders was also a delicate issue, specifically whether there should be a natural level in such relationships, and participants generally agreed that some conflict can be healthy.
"You can’t always be close to all the people all the time – you must pick your battles," said one. With these challenges in mind, spend insight, high-level relationship management skills and market intelligence were seen as vital to properly positioning the function to be able to build trust with difficult internal partners.


Find more discussions between procurement professionals around the challenges of category management and much more on Collaborate.

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