This month’s cover story features Fiona Adams, Director of Client Value Realization at ProcurementIQ, to hear how the market leader in providing sourcing intelligence is changing the very face of procurement…
And below are just some of this month’s exclusives…
ProcurementIQ: Smart sourcing through people power
We speak to Fiona Adams, Director of Client Value Realization at ProcurementIQ, to hear how the market leader in providing sourcing intelligence is changing the very face of procurement…
The industry leader in emboldening procurement practitioners in making intelligent purchases is ProcurementIQ. ProcurementIQ provides its clients with pricing data, supplier intelligence and contract strategies right at their fingertips. Its users are working smarter and more swiftly with trustworthy market intelligence on more than 1,000 categories globally.
Fiona Adams joined ProcurementIQ in August this year as its Director of Client Value Realization. Out of all the companies vying for her attention, it was ProcurementIQ’s focus on ‘people power’ that attracted her, coupled with her positive experience utilising the platform during her time as a consultant.
Although ProcurementIQ remains on the cutting edge of technology, it is a platform driven by the expertise and passion of its people and this appealed greatly to Adams. “I want to expand my own reach and I’m excited to be problem-solving for corporate America across industries, clients and procurement organizations and teams (internal & external). I know ProcurementIQ can make a difference combined with my approach and experience. Because that passion and that drive, powered by knowledge, is where the real magic happens,” she tells us.
ASM Global: Putting people first in change management
Ama F. Erbynn, Vice President of Strategic Sourcing and Procurement at ASM Global, discusses her mission for driving a people-centric approach to change management in procurement…
Ripping up the carpet and starting again when entering a new organisation isn’t a sure-fire way for success.
Effective change management takes time and careful planning. It requires evaluating current processes and questioning why things are done in a certain way. Indeed, not everything needs to be changed, especially not for the sake of it, and employees used to operating in a familiar workflow or silo will naturally be fearful of disruptions to their methods. However, if done in the correct way and with a people-centric mindset, delivering change that drives significant value could hold the key to unleashing transformation.
Ama F. Erbynn, Vice President of Strategic Sourcing and Procurement at ASM Global, aligns herself with that mantra. Her mentality of being agile and responsive to change has proven to be an advantage during a turbulent past few years. For Erbynn, she thrives on leading transformations and leveraging new tools to deliver even better results. “I love change because it allows you to think outside the box,” she discusses. “I have a son and before COVID I used to hear him say, ‘I don’t want to go to school.’ He stayed home for a year and now he begs to go to school, so we adapt and it makes us stronger. COVID was a unique situation but there’s always been adversity and disruptions within supply chain and procurement, so I try and see the silver lining in things.”
SpendHQ: Realising the possible in spend management software
Pierre Laprée, Chief Product Officer at SpendHQ, discusses how customers can benefit from leveraging spend management technology to bring tangible value in procurement today…
Turning vision and strategy into highly effective action. This mantra is behind everything SpendHQ does to empower procurement teams.
The organisation is a leading best-in-class provider of enterprise Spend Intelligence (SI) and Procurement Performance Management (PPM) solutions. These products fill an important gap that has left strategic procurement out of the solution landscape. Through these solutions, customers get actionable spend insights that drive new initiatives, goals, and clear measurements of procurement’s overall value. SpendHQ exists to ultimately help procurement generate and demonstrate better financial and non-financial outcomes.
Spearheading this strategic vision is Pierre Laprée, long-time procurement veteran and SpendHQ’s Chief Product Officer since July 2022. However, despite his deep understanding of procurement teams’ needs, he wasn’t always a procurement professional. Like many in the space, his path into the industry was a complete surprise.
But that’s not all… Earlier this month, we travelled to the Netherlands to cover the first HICX Supplier Experience Live, as well as DPW Amsterdam 2023. Featured inside is our exclusive overview from each event, alongside this edition’s big question – does procurement need a rebrand? Plus, we feature a fascinating interview with Georg Rosch, Vice President Direct Procurement Strategy at JAGGAER, who discusses his organisation’s approach amid significant transformation and evolution.
Our exclusive cover story this month features a fascinating discussion with UK Procurement Director, CBRE Global Workplace Solutions (GWS), Catriona Calder to find out how procurement is helping the leader in worldwide real estate achieve its ambitious goals within ESG.
As a worldwide leader in commercial real estate, it’s clear why CBRE GWS has a strong focus on continuous improvement in its procurement department. A business which prides itself on its ability to create bespoke solutions for clients of any size and sector has to be flexible. Delivering the superior client outcomes CBRE GWS has become known for requires an extremely well-oiled supply chain, and Catriona Calder, its UK Procurement Director, is leading the charge.
Procurement at CBRE had already seen some great successes before Calder came on board in 2022. She joined a team of passionate and capable procurement professionals, with a number of award-winning supply chain initiatives already in place.
With a sturdy foundation already embedded, when Calder stepped in, her personal aim focused on implementing a long-term procurement strategy and supporting the global team on its journey to world class procurement…
We grab some time with Adam Brown who leads the Technology Platform for Procurement at A.P. Moller-Maersk, the global logistics giant. And when he joined, a little over a year ago, he was instantly struck by a dramatic change in culture…
Government of Jersey: A procurement transformation journey
Maria Huggon, Former Group Director of Commercial Services at the Government of Jersey, discusses how her organisation’s procurement function has transformed with the aim of achieving a ‘flourishing’ status by 2025…
The procurement team at Corio on bringing the wind of change to the offshore energy space. Founded less than two years ago, Corio Generation already packs quite the punch. Corio has built one of the world’s largest offshore wind development pipelines with projects in a diverse line-up of locations including the UK, South Korea and Brazil among others.
The company is a specialist offshore wind developer dedicated to harnessing renewable energy and helps countries transform their economies with clean, green and reliable offshore wind energy. Corio works in established and emerging markets, with innovative floating and fixed-bottom technologies. Its projects support local economies while meeting the energy needs of communities and customers sustainably, reliably, safely and responsibly.
Felix Schmitz, Head of Investor Relations & Head of Strategic Sustainability at Klöckner & Co SE explores how German company Becker Stahl-Service is leading the way towards a more sustainable steel industry with Nexigen® by Klöckner & Co.
Having been a leader in procurement for more than 25 years, he has been responsible for over $2 billion in spend every year, negotiating software deals ranging from $75 to over $1.5 billion on a single deal. Don’t miss his exclusive insights where he tells us all about the vital importance of expertly procuring software and highlights the hidden pitfalls associated.
“A lot of companies don’t have the resources to have technology procurement experts on staff,” Brad tells us. “I think as time goes on people and companies will realise that the technology portfolio and the spend in that portfolio is increasing so rapidly they have to find a way to manage it. Find a project that doesn’t have software in it. Everything has software embedded within it, so you’re going to have to have procurement experts that understand the unique contracts and negotiation tactics of technology.”
There are also features which include insights from the likes of Jake Kiernan, Manager at KPMG, Ashifa Jumani, Director of Procurement at TELUS and Shaz Khan, CEO and Co-Founder at Vroozi.
Our exclusive cover story this month features Alan Rankin, Chief Procurement Officer at STADA, who discusses his company’s journey to offering a best-in-class procurement function.
Few industries can say that statement with certainty. But for the pharmaceutical industry during the COVID-19 pandemic, finding a solution quickly was non-negotiable.
Indeed, Alan Rankin, Chief Procurement Officer at STADA, acknowledges the role his sector played in helping to combat one of the biggest health crises of all time. He says the COVID-19 period made him “extremely proud” to be part of the industry. “The pharmaceutical industry worked hard to come up with a solution during a time when governments struggled to cope with what happened,” he recalls. “The industry had a real impact on the world being able to handle the situation and not going into financial meltdown. That alone makes me so proud to be in this space.”
Today, STADA stands as a renowned manufacturer of high-quality pharmaceuticals. The firm operates with a three-pillar strategy consisting of consumer healthcare products, generics and specialty pharmaceuticals. Its consumer healthcare brands such as Hedrin, Nizoral, Grippostad and Zoflora are among the top sellers in their respective product categories…
Not only that but we also have fascinating discussions involving all the hot topics around the procurement function at the moment, with George Schutter, Former Chief Procurement Officer at the District of Columbia, Noemie Chetty, Director of Procurement of the Seychelles’ Public Utilities Corporation (PUC) and Trevor Tasker, CEO at EMCS Industries. Plus, Bob Booth Senior Partner, Finance & Supply Chain Transformation at IBM Consulting details how AI could affect the procurement function. “We are now witnessing a tipping point in the application of AI at real scale, and CPOs are wondering how this impacts them and their colleagues. This article aims to equip CPOs and their teams with some ideas to consider and some pointers on applying AI in a professional capacity to their company,” he reveals.
Procurement is in a state of flux. Against a backdrop of economic uncertainty, the procurement landscape is volatile and requires…
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Procurement is in a state of flux.
Against a backdrop of economic uncertainty, the procurement landscape is volatile and requires agility to navigate turbulent waters. But, despite significant disruption could there still be opportunity?
Simon Whatson, Vice President of Efficio Consulting, is optimistic about the future of digital procurement and despite a challenging few years he is confident of a successful bounce back. He gives us the lowdown on the direction of travel for digital procurement in 2023.
As an executive with considerable experience in the space, we’d love to learn more about your background and how you ended up in procurement. Why was this the specialism for you and how did you get involved to begin with?
Simon Whatson (SW): “I think the one-word answer of how I came into procurement was accidental. I studied maths at university, with a year in France, before I began looking for different roles to apply for.
“Eventually, I was offered a position with a big plumbing and heating merchant with global operations. I worked in that supply chain team for two and a half years. Although it was called supply chain, a lot of the work was procurement, which involved negotiating with suppliers. It was after that stint there, that I discovered consulting and joined a boutique procurement consultancy. Now I am onto my third consultancy and I’m very happy here!
“In terms of why I’ve stayed, one of the success factors in procurement is being able to work cross-functionally. Procurement doesn’t own any of the spending that it is responsible for helping to optimise. It must work with other functions and the spend owners. I quite like the people side of that, building relationships, almost selling internally to bring teams together. That really appeals to me and is a key reason why I’ve been very happy in procurement.”
As we move into exploring procurement today in 2023. The space is filled with challenges and complexities. You only need to look at the last few years. Covid, war in Ukraine, inflation – how would you describe the world’s recent challenges and their effect on the industry and what do you feel CPOs and leaders can do to combat these issues?
SW: “I would flip it around and say that these are not so much challenges but rather opportunities for procurement. When I started my career 18 years ago, procurement was often fighting to get a voice and there were complaints that procurement was not represented at the top table, but the war in Ukraine, inflation, COVID and ESG, these are things which are now on the C-suite agenda and procurement is ideally positioned to help companies face those challenges. If you think about COVID and the war in Ukraine, procurement is in a privileged position to help with this.
“I see some procurement functions that prefer to do what they know, which focuses on the process and transactional side. However, there are also many forward-thinking CPOs and procurement professionals out there, that have really seized this opportunity of being on the C-suite agenda and drive the thinking and the solutions to some of these big challenges we’re seeing.”
Although new technology in procurement has been around for well over a decade, digitalisation has become so much more of an important topic. How would you sum up where procurement and supply chain are in terms of digital transformation today?
SW: “It’s a bit laggard, but digital transformation is difficult, and we have to recognise there are some real trailblazers. There are some firms doing some fantastic things in digital to produce better outcomes. If you contrast your experience when you’re buying something in your private life, it’s much easier than 20 years ago. You can get access to a wealth of pre-sourced things, whether it’s food, a holiday, a car, or a book. You can see reviews of what other people think of these things.
“But when you go into your workplace as a business user and you want to buy something, it doesn’t quite work like that yet. You often have to fill in a form, send it off and wait for them to come back to you. They might come back a little bit later than you were hoping and might tell you that they don’t have that part on the supply frameworks. I think people sometimes get confused about how it can be so easy to buy something as large as a car or a holiday on their sofa at home, but when they want to buy something at work, it seems to be quite cumbersome. Digital can help a lot with that, but it is incumbent on organisations and procurement functions to figure out how to recreate that customer experience that we’ve become accustomed to in our private lives.”
With a new generation of leaders growing up with technology, some might say that it could be a key driver in helping to speed the adoption in procurement along. Is this something you would agree with or what would you point to as a key driver?
SW: “I do think that it will act as one of the catalysts for further digital transformation in organisations, because if procurement doesn’t manage to recreate that customer experience that the new generation expects, then they won’t use procurement going forward and will look to bypass it.
“The analogy that I’ve used previously in this case is one of travel agents. I remember as a child, my parents were able to take us on holiday and I remember the whole process. We would walk into town to the travel agent, and look at some of the brochures of options. They often then had to phone the various airlines or resorts on our behalf. They might not be able to get through, so we’d have to come back the next day. I remember as a child being quite excited by the whole process but actually, thinking back, it was quite cumbersome. You compare that to now, with being able to review online, and you can get instant answers to your questions. It’s not a coincidence that travel agents don’t really exist anymore.”
How much of a challenge is it to not get caught leveraging technology for technologies sake? How important is it to stay true to your approach and be strategic?
SW: “We conducted a study of many procurement leaders and CPOs a few years ago, and one of the things that we found was that about 50% of procurement leaders admitted to having bought technology just on the basis of a fear of missing out, without any real understanding of the benefits that technology was going to bring. That was a real shock and a revealing find because technology is not cheap, and its implementation is quite disruptive. If you’re purchasing a system because everybody else is using it, then there could be some pretty costly mistakes. It is really important to make sure that when buying technology, it is because the benefits are fully understood.
“My advice to companies when looking to digitalise is own your data, visualise that data, and manage your knowledge. If you can focus on getting those things right in that order, and make your technology decisions to support that goal, then that’s a much better way of thinking about it rather than just jumping in and buying a piece of technology.”
It’s clear that the procurement space is an exciting, but challenging, place to be. What do you think will play a key role in the next 12 months to push the digital conversation further to take procurement to the next level?
SW: “Looking forward, one thing that procurement needs to do and continue to do is attract the best people. Ultimately, people are what makes an organisation, and it is what makes a function successful. I think procurement has often not looked for the right skills in the people that it employs. Traditionally, it’s looked for people with procurement experience and while they are valuable and required, we also need leadership potential. People who think a bit more outside the box and aren’t so process driven. A lot of what procurement has done in previous years has been process driven, so if you’re just limiting your search of people to those that have had procurement experience, you’re inevitably going to end up with a lot of people who are process driven.
“I think being bolder and recruiting people from different backgrounds with different skill sets is the way to go. If procurement can ‘own’ the ESG space, that will help with the younger generation see procurement make a difference. I think that’s one thing that will be key to success going forward.”
Check out the latest issue of CPOstrategy Magazine here.
Paul Farrow, Vice President of Hilton Hotels’ Supply Management, sits down with us to discuss how his organisation’s procurement function has evolved amid disruption on a global scale
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The hospitality industry has endured a rough ride over the past few years.
Following the COVID-19 pandemic which stopped the world in its tracks and now with millions facing a cost-of-living crisis, it’s been a period of unprecedented disruption for those involved in the space and beyond.
But it’s a challenge met head-on by Paul Farrow, Vice President of Supply Management at Hilton Hotels, and his team who have been forced to respond as the world continues to shift before their eyes.
Farrow gives us a closer look into the inner workings of his firm’s procurement function and how he has led the charge during his time with Hilton Hotels.
Could we start with you introducing yourself and talking a little about your role at Hilton Hotels?
Paul Farrow (PF): “I’m the Vice President of Hilton’s Supply Management, or HSM as we call it. I’ve been with Hilton Hotels for 12 and a half years, and my role is to head the supply chain function for our hotels across Europe, the Middle East and Africa.
“Over the past few years, Hilton has grown rapidly and has now got 7,000 hotels in over 125 countries globally. What is really exciting is Hilton Supply Management doesn’t just supply Hilton Hotels and the Hilton Engine because we also now supply our franchisees and competitive flags. While we have 7,000 hotels globally, Hilton Supply Management actually supplies close to 13,000 hotels. That’s an interesting business development for us, and a profit earner too.”
You’re greatly experienced, I bet you’ve seen supply chain management and procurement change a lot in recent years?
PF: “The past two to three years have been tremendously challenging on so many industries but I’d argue that hospitality got hit more than most as a result of the Covid pandemic. Here at Hilton, supply management was really important just to keep the business operational throughout that tough time, but I’m delighted to say we’re fully recovered now.
“Looking back, it was undoubtedly difficult, and you only have to look at the media to see that we’re now going through a period of truly unprecedented inflation. On top of the normal day job, it’s certainly been a very busy time.”
Hospitality must have been under an awful lot of pressure during the pandemic…
PF: “Most of our teams as a business and all functions have worked together far more collaboratively than ever before through the use of technology and things like Microsoft Teams and Zoom. Trying to work remotely as effectively as possible changed the way we all had to think and the way we had to do. Now we’re back in the workplace and in our offices, we’re actually looking to take advantage of that new approach.”
Inflation, rising costs, energy shortages, as well as drives towards a circular economy means it’s quite a challenging time for CSCOs and CPOs right now, isn’t it?
PF: “Those headwinds have caused and created challenges of the like that we’ve not seen before. The war in Ukraine and Russia has meant significant supply chain disruption and supply shortages of some key ingredients and raw materials. China is a significant source of materials and they’re still having real challenges to get their production to keep up with demand.
“All the local and short-term challenges are around energy and fuel pricing, so throughout the supply chain that’s been a major factor to what we’ve had to deal with. On top of that is the labour shortages. We rely heavily throughout the supply chain and within our business to utilise labour from around the world. In my region, particularly from say Eastern Europe as well as other businesses all fighting for a smaller labour pool than we had before. We are fighting with the likes of the supermarkets, Amazon’s, not just other hotel companies to capture the labour pool we need both in our properties but also within our supply chain supplies themselves.
Hilton operates a rather unique procurement function, doesn’t it?
PF: “We trade off the Hilton name because our brand strength is something that we are able to utilise and we’re very proud of, but we’ve also got additional leverage by having that group procurement model.
“We’ve got essentially two clients. We’ve got our managed estate which is when an owner chooses to partner with Hilton, they’re signing a management agreement because they want the benefit and value of the Hilton engine. That could be revenue management, how we manage onboarding clients and customers through advertising, as well as the other support we give in terms of finance, HR, marketing and sales as well as procurement.”
HSM is a profit centre and revenue driver through its group procurement model but how does this work?
PF: “Our secret sauce is our culture. It’s our people and that filters across all of our team members and indeed all of our functions. The key strategic pillars are the same for health and supply management around culture, maximising performance and so on as they are across the overall global business.
“Across our 7,000 plus hotels, the majority are actually franchised hotels because that’s the legacy of what still is the model in the US. When I joined Hilton 12 and a half years ago, the reverse is true where nearly all of our hotels in Europe, Middle East and Africa, and indeed in Asia Pacific, were and are managed. In the Europe, Middle East and Africa regions right now we’re building up close to a 50/50 split between managed, leased and franchised.”
What has pleased you most about the roll-out of the HSM?
PF: “It’s certainly not been easy because we’ve got 70 countries that sit within our region here in EMEA and Hilton’s penetration in those individual countries is very different. We may have 100 hotels in one of those markets and only one or two in specific countries. Our scale and our ability to get logistics solutions is different by market.
“Getting everyone on board to what we want to achieve to our guests and to our owners means we have to pull different levers. We have very effective brand standards. If you’re signing up to Hilton, you’re signing up to delivering against those brand standards that we believe are right for our organisation.”
What kind of feedback have you had from your clients?
PF: “Integrity is in our DNA, and we work very closely with our suppliers who we value as partners. These are long-term relationships, and we work hand in hand because we have to see that they’re successful so that we can be successful – it’s really important to what we do and we constantly look for feedback.
“With our internal and our external customers, we’ll have quarterly business reviews and so we’ll get that feedback through surveys where we are asking them to tell us what we do well and what we could do better. Our partners are now asking what additional value can you do to bring support to our organisation through ESG? So that’s what’s on the table now when it wasn’t before. But it’s not just that – it’s about the security of supply competitiveness, competitiveness of pricing, and a whole bunch of other very important things as well.”
Looking to the future, what’s on the agenda for the next few years?
PF: “We’re out there meeting and greeting people in person and there’s always new opportunities that make things exciting in what we do and how we work. Innovation’s very high on our agenda and we’re very proud of what we do in food and beverage. In non-food categories, it’s about how we support our owners and our hotel general managers to find that competitive edge and do the next big thing ahead of our competitors.”
Anything else important to know?
PF: “One thing we’ve been able to take full advantage of is how we’ve been able to grow our business by bolting on new customers. I think it’s fantastic that our competitors choose to use Hilton Supply Management because they benchmarked what our capabilities are and how competitive we are.
“Another key part of the agenda is environmental, social and governance (ESG) sustainability. Responsible sourcing and everything that sits within that is front and centre of what we do. Within that you’ve got human rights, animal welfare, single use plastics as well as general responsible sourcing like managing food waste. The list is very long, but they’re all very important.”
Check out the latest issue of CPOstrategy Magazine here.
CPOstrategy catches up with Sam de Frates, who has been leading procurement transformation at Mars, Incorporated, to discover how one of the world’s largest enterprises has put people at the heart of its plans…
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Our exclusive cover story this month, sees us catching up with Sam de Frates, Vice President, Commercial – Europe, CIS & Turkey at Mars, Incorporated, and the leader of procurement transformation at the company, to discover how one of the world’s largest enterprises has put people at the heart of its plans…
Talk of technological change and digital transformations often excludes the most vital tools in delivering meaningful value within an enterprise: the people. Because new tools, processes and capabilities only truly maximise their value if they are shaped by the very people that require their services. The adoption of technology without the human touch can be an expensive opportunity missed.
An experienced procurement leader who has worked at some of the largest companies on earth, de Frates joins us for a chat from his London office to discuss how digital procurement at Mars has evolved under his guidance, whilst the company undergoes cross functional changes at scale – a hugely significant transformation with Mars Associates and its suppliers at its heart…
Sara Malconian, Chief Procurement Officer at Harvard University & Jim Bureau, CEO of JAGGAER explain how ESG & the Circular Economy is changing the evolution of procurement.
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We speak to Sara Malconian, Chief Procurement Officer at Harvard University and Jim Bureau, CEO of JAGGAER to see how ESG and the Circular Economy is changing the evolution of procurement…
Sara, how have you seen your role evolve as a procurement leader over the years as ESG and supplier diversity come into focus?
Procurement leaders have gone from ‘cost cutters’ to ‘problem solvers’ within their organisations. Our core mandates used to be to drive cost savings and efficiency. We were hyper-focused on getting the most out of the organisation’s spend and supplier relationships. Those priorities haven’t gone away, especially in today’s inflationary environment, but the expectations of the procurement function are significantly higher and broader today.
Procurement functions saved their companies during COVID and the confluence of disruptions that followed. We showed we are a strategic linchpin. We are now looked upon to drive value and impact and strategically guide our organisations to achieve broader goals, including diversity and environmental, social, governance (ESG). Internal stakeholders realised the benefits of procurement and sought help with advancing their department’s agendas or solving their challenges. We listen to their needs, allocate the right resources, and ultimately enable them and the overall organisation to be successful.
I’ve been in procurement for over 20 years, and I can honestly say you’d be hard-pressed to find a more rewarding and exciting career. Procurement professionals have a real opportunity to make a tangible difference within their organisations, communities, and the world through the way we source products and services.
What is Harvard doing to have a positive impact on society? Can you share some examples, Sara?
Across the Harvard community, students, alumni, faculty, and staff are advancing scholarship and teaching on the world’s most significant challenges, and everyone wants to do their part to address inequities. Supplier diversity and inclusion have been a priority for Harvard for years, but we wanted to make even more of an impact and really invest in the growth and development of diverse businesses, especially as the pandemic highlighted inequities and disparities within our communities.
In 2021, we formed the Office for Economic Inclusion & Diversity (OEID), which is dedicated to reaching out to diverse suppliers, giving them opportunities, and providing them with tools, training, and resources to be successful. The office also encourages the use of underrepresented business enterprises (UBEs) in the purchasing of all goods, services, and construction at Harvard and standardises procurement practices with these businesses across the university.
We’re proud of the work this office is doing. We’re actively training suppliers on Harvard’s policies and how they can work with us. We’re creating a central location for them to access bid and RFP opportunities. UBEs can also apply to be mentored by Harvard Business School students.
We’ve created a dashboard to track and analyse spend with diverse suppliers across all of Harvard’s schools and measure progress over time. Everything we’re doing is aimed at increasing spend with our existing diverse suppliers, as well as the number of diverse suppliers that work with Harvard, and helping these suppliers grow their businesses.
Jim, why is prioritizing ESG and supplier diversity important and what steps can companies take today to progress in their journey?
Beyond being the right thing to do, investors, boards, regulators, customers, and employees now expect organisations to prioritise ESG and diversity initiatives and walk the talk. There’s also a clear business impact. Supplier diversity drives competitive bidding processes that lead to cost savings. Working with partners who are sustainable and have different ideas and perspectives fuels innovation and creates a competitive advantage. Sourcing from a sustainable and diverse supplier pool also reduces risk by broadening organisations’ access to multiple resources for various materials, products, and services.
One of the most critical steps companies can take to progress on their ESG journey is to make it clear to suppliers that environmentalism is a priority for their organisation. They will attract suppliers with higher levels of ESG maturity and provide suppliers who are earlier on in their ESG journey with sustainability toolkits and training to help educate them on eco-friendly best practices and sustainability innovations.
This step avoids having to overhaul their supply chain to account for ESG. Strategically managing suppliers by leveraging third-party data, scorecards, and supplier audits are crucial for understanding the ESG risks that suppliers pose and minimizing disruptions by working with them to correct these issues.
Successful supplier diversity programs start with a top-down culture shift. If a company’s culture isn’t diverse, inclusive, and supportive for all its stakeholders, they won’t be able to drive supplier diversity in a meaningful way. Supplier diversity strategy should map back to company goals and include an executive-level champion to sponsor the program internally and help bring in the resources they need.
Outside of leveraging technology to identify diverse suppliers and build a program, businesses can talk with people who have been in their shoes. They can collaborate with like-minded companies at industry events, engage in relevant LinkedIn groups, and connect with organisations such as the National Minority Supplier Development Council.
Once diverse suppliers are on board, organisations can create a supplier diversity policy that clearly outlines how many diverse suppliers need to be invited to bid for each event to ensure teams are executing on the strategy. Leading supplier diversity programs go beyond simply spending with diverse suppliers to providing mentorship and training them on how to respond to RFPs correctly, as well as creating environments where it’s easier for them to engage.
Jim, what role does technology play in helping organisations achieve ESG and supplier diversity goals?
Technology is a key enabler of ESG and supplier diversity initiatives. One of the biggest obstacles to supplier diversity and ESG is a lack of reliable supplier data. Suppliers don’t always keep their information up to date in self-service portals. The data procurement teams have isn’t always enriched to the level they need, with insights on diversity status, certifications, and proof of ESG compliance.
Researching and assessing suppliers is tedious and time-consuming, which leads many organisations to skip the verification step. Without this information, organisations don’t have a true picture of the inclusivity and sustainability of their supplier network, which makes it impossible to identify the right partners to source from to meet their ESG and supplier diversity goals and make an impact.
Technology addresses this challenge by automatically collecting, enriching, validating, and integrating the supplier data needed to obtain this level of supply base visibility and make decisions that drive ESG and diversity. AI-powered tools are available to match buyers with specific diverse suppliers who also have the capabilities to help drive ESG objectives and meet broader procurement criteria.
Software that segments the supply base and helps visualise spending with small and diverse suppliers across a variety of classifications is critical for setting benchmarks and measuring progress and ROI.
Jim and Sara, how do you expect the ESG and diversity conversation to shift and where should procurement leaders focus for the future?
Sara: I expect we’ll see the conversation shift to emphasise measurement. It’s not enough anymore to say you’re committed to ESG – you need to prove it and show demonstrable progress and ROI. Maintaining the momentum on ESG initiatives is hard. Technology is key for setting benchmarks and goals, ensuring accountability for hitting key milestones, and measuring progress and return in a credible way.
Jim: In a declining economic environment, choices inevitably need to be made. I expect the conversation around ESG will center around where companies can focus to maintain progress on ESG initiatives as financial and economic pressures come to the forefront. While some companies may need to scale back in some areas to preserve cash and resources to navigate a downturn, I’d advise them to be careful about slowing ESG down too much as it will be much harder to catch up to current levels after the economy bounces back.
I’d argue that when ESG is done right it can be a strategic lever for navigating a down economy, saving organizations money and resources, driving innovation, and helping them achieve broader business objectives and resilience.
Here are five of the biggest procurement events happening during 2023 that chief procurement officers won’t want to miss.
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London, UK | 1-2 February 2023
Held at the QEII Centre in central London, Procurement Futures is a new conference, launching in 2023. It promises delegates the chance to find out how to make supply chains more resilient, with thought-provoking and presentations and discussions designed to inform and inspire.
There is a flexible programme of content that can be tailored to attendees’ preferences, with networking opportunities throughout and a huge variety of sessions to attend and take part in.
This CIPS event has three streams of content: Insights, Ignite and Interact. Insights will showcase presentations and panel discussions from leaders, Ignite will consist of hands-on workshops to help delegates optimise their procurement strategies and Interact will be smaller groups taking part in interactive roundtables and debates.
Speakers across the two days will include Ross Grierson, Director of Procurement, Primark; Patrick Dunne, Director of Group Property, FM & Procurement (CPO), Sainsburys Plc; Rebecca Simpson, Procurement and Supply Chain Director, Balfour Beatty; and Nick Jenkinson, Chief Procurement Officer, Santander. In addition, delegates are ablew to book a one-to-one career workshop, where they’ll get advice on professional development from coaches covering a variety of specialisms.
Tickets are £795 for CIPS member, £995 for a non-member and £2240 for a supplier/solution provider, and there is a discount of 30% for tickets purchased before 30 November 2022.
The third World Digital Procurement Summit is aimed at procurement directors, VPs, managers and other industry specialists. The two-day event will focus on accelerating procurement processes, adopting emerging technologies, finding the right talent, overcoming the barriers to progress and embarking on a journey of transformation. It’s a hybrid event, bringing together procurement experts from various industries, which will maximise knowledge exchange opportunities. The event organisers list five key learning points for delegates:
Exploring the latest advances in data and cognitive technologies to gain greater insights and improve procurement processes
Overhauling the procurement ecosystem with new technologies and strategies to drive business value
Sharing the best practices of monitoring and managing a range of risks to hedge against future disruptions
Developing capabilities and skillset required for the digital transformation of procurement
Defining ESG metrics of the procurement strategy to ensure business continuity
Speakers will include Paul Harlington, Group Procurement Director at TUI Group and Patrick Foelck, Head of Strategy and Transformation Procurement at Roche.
Click here to check out a video from a previous event. Tickets cost €1495.
Returning for its 8th annual event, Women in Procurement & Supply Chain will deliver two days dedicated to leadership and the future of procurement. The event will feature a series of exclusive panel discussions and keynote addresses examining career development, overcoming imposter syndrome, working with confidence, developing an unbeatable talent pool, mentoring, diversity and inclusivity.
It will also address risk mitigation, digital disruption, ESG, sustainability, economic development, ethical sourcing, category management, cultural diversity, strategic sourcing, supplier relationships, procurement with purpose, and supply chain resilience. There are two pre-conference masterclass options on 6 March – that can be booked separately – covering either contract law or leadership skills.
Some of the reasons to attend include:
Discover the path to taking your procurement career to a new level while elevating your organisation with dedicated days on leadership and the future of procurement
Learn best practice strategies to facedown supply chain vulnerabilities and reduce risk exposure
Get ahead of the game with insights into the future of procurement and the impact of globalisation on modern supply chains
Put yourself at the cutting edge of ESG and procurement with the latest updates and trends in procurement with purpose
Speakers for the main two-day conference include Michelle Richard, Director of Procurement, Thales; Karina Davies, Chief Procurement Officer, icare NSW; and Kylie McKinlay, Procurement Partner – Property and Business, Australian Broadcasting Corporation.
Tickets start at $3,495 with discounts available until 25 November 2022.
With a focus on what makes CPOs tick, the Americas Procurement Congress will feature the region’s most progressive CPOs sharing their expertise in keynote presentations and working groups.
Giving delegates the tools to stay on the cutting edge of procurement developments, there are also sessions aimed at those with responsibilities over governance, procurement capabilities and quantifying data. Unsurprisingly, sustainability will also be a key theme in 2023, and attendees will hear from a diverse range of sustainability leaders about how to transition from traditional metrics to a purpose-driven function.
The agenda for Americas Procurement Congress 2023 will include:
Sustainability of the future
How to transition from traditional metrics to a purpose-driven function
Harnessing the power of digital transformation
Utilizing data as a driver of sustainable value, supply continuity and transparency Agile procurement
New approaches and skills that facilitate speed and agility
Removing friction from the procurement process to support high-velocity sourcing
Beyond Just in Time
Designing future-fit supply networks for an age of chaos and conflict
Gartner Supply Chain Symposium/Xpo 2022 addressed the most significant challenges that chief supply chain officers and supply chain leaders face as they mitigate risk and navigate uncertainty in an increasingly dynamic and challenging environment.
At the conference, the top 5 sessions that CSCOs and supply chain leaders met on included:
Signature Series: The Future of Supply Chain
What the Pivot to Sustainable Profit Means for Procurement Leaders
The Art of the New Age One Page Dashboard: Why Your Current Perfor-mance Measures May Be Doing More Harm Than Good
Manage Supplier Risk With Technology
Procurement Role Redesign: Stop Fitting Square Pegs Into Round Holes
Our exclusive cover story this month features Sangram Bhosale, CPO at Xcel Energy.
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Our exclusive cover story this month features Sangram Bhosale,Vice President and Chief Supply Chain Officer at Xcel Energy. Sangram Bhosale is a highly experienced CPO with an impressive track record of delivering procurement excellence within the energy sector for some of its biggest names.
When the former TransAlta and Husky Energy CPO joined Xcel Energy as Vice President and Chief Supply Chain Officer (CSCO) in 2020, he wasted no time devising a procurement transformation plan to advance the function to the top quartile. One that would capacitate the rest of the organization to meet and overcome the many technical and tactical challenges to meet current and future needs.
What attracted Bhosale to Xcel Energy was its visionary leadership team and an opportunity to catalyze the profound shift in how energy is generated and consumed.
“One of the things that I love, and a big part of why I joined Xcel Energy, is that we are a purpose-driven organization with a bold vision of being an industry leader in clean energy. The fast-evolving and innovation-driven utility industry also attracted me,” he tells us from his Denver office.
“Today, utilities are no longer the stodgy beast of yesteryears where not much had changed for decades. New technology is being explored and adopted, with billions invested in grid expansion and strengthening to meet reliable, cleaner, and increased energy demand. To be at the forefront of and lead that clean energy transition aligns closely with my values and beliefs and makes my role at Xcel Energy very exciting.”
Elsewhere, we also feature exclusive interviews with Vice President of Procurement, Anna Barej, and Director, Procurement Center of Excellence, Shawn Calabrase from Best Buy, Alessandro Gaiati, CPO at Fedrigoni, Norian Wasch, Director Procurement at EuroFiber, David Latten, Head of Global Indirect Procurement at Logitech, as well as Heath Nunnemacher, VP Global Electronics Sourcing, TTI and Mark Brady, Global Supply Chain Director at McPherson’s. It’s a bumper issue!
This month’s cover story is an exclusive and compelling insight into the procurement strategy at Vodafone New Zealand.
“For me, the future of procurement is two things: digital and sustainability,” says Rajat Sarna, Chief Procurement Officer and these two themes are the thread that runs through everything he’s put into place since he took over the reins of the procurement function at Vodafone New Zealand in October 2020.
The role was a huge one to take on, too – the telco employs 2,000 people, serves 2.4m customers and is a $2bn revenue company. The scale of its operations is huge with customers consuming over 3 billion minutes, 4,500 terabytes of mobile data and 55,000 terabytes of fixed line data every month. A key part of his mandate was to transform procurement into a market-leading operating partner to the business that would “ultimately improve the value that we deliver to our customers”.
Sarna went back to basics initially, thinking about what the future capability of Vodafone New Zealand would look like, and what its procurement operation needed to be to support this. He says: “It was very critical for me to have a purpose and it cannot just be better savings or improved cost position. That’s not purpose; purpose is: what are we doing in terms of how we align with the future of procurement?”
Elsewhere, we have exclusive interviews with procurement strategists Lawrence Kane, a SIG Sourcing Supernova Hall of Fame member and Nirav Patel, CEO of Bristlecone. Plus, a ProcureTech exclusive and a guide to the best procurement events over the next 12 months and much, much more.
How can businesses cope with persistent, global supply chain issues and what are the concerns looming on the horizon?
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The Digital Insight speaks to Nirav Patel, CEO of Bristlecone (a supply chain company of the $19bn Mahindra group), who discusses how businesses can cope with persistent, global supply chain issues – and outlines the concerns looming on the horizon.
The evolution of procurement into a true strategic business enabler is fuelled by technological advances. The ability to dig deep into data with true visibility into an enterprise’s entire spend and supplier network has been provided through ever-evolving platforms, such as Coupa’s highly successful Business Spend Management (BSM) platform. In BSM, Coupa has created a digital ecosystem that brings suppliers, vendors, and partners together in the same room with a single ‘source of truth’.
Elsewhere, we discuss how strategic procurement is the way forward at a rapidly growing enterprise, with John Butcher, Group Procurement Director Just Eat Takeaway.com. Plus, we grill Maximillian Tan, Director Business Procurement Asia at FrieslandCampina, one of the largest dairy companies in the world with a cooperative tradition going back 150 years, on how he is unlocking value at the enterprise.
CPOstrategy’s cover star this month is procurement transformation expert, and CEO and Co-Founder of Tropic, David Campbell…
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Right now, procurement excellence is blooming. Experts determined to create change are coming to the fore and aligning procurement with SaaS to bring an end to the do-it-yourself way of working that decimates technology budgets. Tropic is one such game-changer, providing the tools to navigate software procurement’s complexities for competitive advantage.
The CEO and Co-Founder of Tropic is David Campbell, a born entrepreneur. He grew up on a cattle ranch in California and has always had at least one side-hustle on the go. Even as a child, he was running some form of money-making venture at any one time – but he didn’t necessarily consider that entrepreneurial pursuits were his calling until later.
Campbell studied English at UC Berkeley, and on graduating assumed he’d go into the arts. He’s a lifelong musician and writer, and he moved to a cabin in the woods to write the ‘next great American novel’. This venture, while it didn’t have the exact results he had hoped for, planted the seed in his mind that perhaps entrepreneurialism was for him because he loved setting his own hours and vision, creating a strategy, and executing that…
Elsewhere, we have exclusive interviews with supply chain and procurement leaders at the City of Edmonton and QSC, as well as the results of our first Sustainable Procurement Champions Index. We also have some exciting news from DPW too, ahead of its conference later this month.
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 ProcureTech and 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:
Future procurement operating models
Digital work in the future
Procurement process digitalisation
Digital supplier management
Challenges to progress
Value of digital adoption
“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.”
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.
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...”
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.
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.
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.
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.
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.
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…
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…
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..
Governments around the world have highlighted supply chains as an area for urgent attention in tackling cyber risk in the coming years…
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Business ecosystems have expanded over the years owing to the many benefits of diverse, interconnected supply chains, prompting organizations to pursue close, collaborative relationships with their suppliers. However, this has led to increased cyber threats when organizations expose their networks to their supply chain and it only takes one supplier to have cybersecurity vulnerabilities to bring a business to its knees. To this point governments around the world have highlighted supply chains as an area for urgent attention in tackling cyber risk in the coming years.
Looking beyond your own perimeter
Over the last few years, many organizations have worked hard to improve their cyber defenses and are increasingly “harder targets”. However, for these well-defended organizations, now the greatest weaknesses in their defenses are their suppliers, who are typically less well-defended but with whom they are highly interconnected.
At the same time, the cyber threat landscape has intensified, and events of the past year have meant that security professionals are not only having to manage security in a remote working set up and ensure employees have good accessibility, they are also having to handle a multitude of issues from a distance whilst defending a much broader attack surface. As a result, points of vulnerability have become even more numerous, providing an attractive space for bad actors to disrupt and extort enterprises. Threats have escalated, including phishing and new variants of known threats, such as ransomware and Denial of Service (DDoS) attacks, as well as increases in supply chain attacks.
But where supply chains are concerned, it is nearly impossible to effectively manage this risk unless you know the state of your suppliers’ defences and continually ensure that they are comparable to your own. Organizations must deeply understand the cyber risks associated with the relationship and try to mitigate those risks to the degree possible.
However, that’s easier said than done. With the sending and receiving of information essential for the supply chain to function, the only option is to better identify and manage the risks presented. This requires organizations to overhaul existing risk monitoring programs, technology investments and also to prioritize cyber and data security governance.
Ensuring the basics are in place
At the very least organizations should ensure that both they and their suppliers have the basic controls in place such as Cyber Essentials, NIST and ISO 27001, coupled with good data management controls. They should thoroughly vet and continuously monitor supply chain partners. They need to understand what data partners will need access to and why, and ultimately what level of risk this poses. Likewise, they need to understand what controls suppliers have in place to safeguard data and protect against incoming and outgoing cyber threats. This needs to be monitored, logged, and regularly reviewed and a baseline of normal activities between the organization and the supplier should be established.
As well as effective processes, people play a key role in helping to minimize risk. Cybersecurity training should be given so that employees are aware of the dangers and know how to spot suspicious activity. They should be aware of data regulation requirements and understand what data can be shared with whom. And they should also know exactly what to do in the event of a breach, so a detailed incident response plan should be shared and regularly reviewed.
IT best practices should be applied to minimize these risks. IT used effectively can automatically protect sensitive data so that when employees inevitably make mistakes, technology is there to safeguard the organization.
Securely transferring information between suppliers
So how do organizations transfer information between suppliers securely and how do they ensure that only authorized suppliers receive sensitive data? Here data classification tools are critical to ensure that sensitive data is appropriately treated, stored, and disposed of during its lifetime in accordance with its importance to the organization. Through appropriate classification, using visual labelling and metadata application to emails and documents, this protects the organization from the risk of sensitive data being exposed to unauthorized organizations further down the line through the supply chain.
Likewise, data that isn’t properly encrypted in transit can be at risk of compromise, so using a secure and compliant mechanism for transferring data within the supply chain will significantly reduce risks. Managed File Transfer (MFT) software facilitates the automated sharing of data with suppliers. This secure channel provides a central platform for information exchanges and offers audit trails, user access controls, and other file transfer protections.
Layering security defenses
Organizations should also layer security defences to neutralize any threats coming from a supplier. Due to its ubiquity, email is a particularly vulnerable channel and one that’s often exploited by cybercriminals posing as a trusted partner. Therefore, it is essential that organizations are adequately protected from incoming malware, embedded Advanced Persistent Threats, or any other threat that could pose a risk to the business.
And finally, organizations need to ensure that documents uploaded and downloaded from the web are thoroughly analyzed, even if they are coming from a trusted source. To do this effectively, they need a solution that can remove risks from email, web and endpoints, yet still allows the transfer of information to occur.
Adaptive DLP allows the flow of information to continue while removing threats, protecting critical data, and ensuring compliance. It doesn’t become a barrier to business or impose a heavy management burden. This is important because traditional DLP ‘stop and block’ approaches have often resulted in too many delays to legitimate business communications and high management overheads associated with false positives.
Cyber criminal attacks set to rise
Many of the recent well publicized attacks have been nation state orchestrated. Going forward this is going to turn into criminal syndicate attacks. Cybercriminals already have the ransomware capabilities and now all they need to do is tie this up with targeting the supply chain. Therefore, making sure you have the right technologies, policies and training programs in place should be a top priority for organizations in 2021. If you are interested in finding out more about protecting your supply chain, why not download our eGuide: “Managing Cybersecurity Risk in the Supply Chain.”
According to Accenture, 94% of Fortune 1000 companies experienced supply chain disruption owing to the pandemic…
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Last year, the COVID-19 pandemic changed the future of supply chains indefinitely. When compared to overall business impact, most senior leaders said their supply chain was more susceptible to disruption from COVID-19 than their workforce, systems, or operations. According to Accenture, 94% of Fortune 1000 companies experienced supply chain disruption owing to the pandemic. Amidst the ongoing impact of COVID-19, as countries move in and out of lockdowns and vaccines are rolled out, this will continue to be felt worldwide throughout 2021 and beyond as organisations look to recover from the disruption to their supply chains.
However, the unprecedented nature of COVID-19 has forced companies, and industries, to rethink and transform their supply chain models – for good. Many are now looking at how they can move away from linear supply chains to a more holistic, robust and sustainable supplier ecosystem.
It is interesting because since humans began making and distributing products to one another, the structure of the supply chain has remained predominantly untouched. Raw materials flow in, they are changed into a product and distributed and used until finally they are thrown away. This linear – take, make, throw away – supply chain has been sufficient to keep economies churning for decades, but now organisations are seeking out more robust, more profitable, more sustainable, circular supply chain ecosystems.
Adopting a circular approach
The circular supply chain is a model that encourages manufacturers and sellers of products to take discarded materials and remake them for resale. To remain competitive and relevant linear supply chain entities must be willing to transition to a circular supply chain, which includes the entire reverse logistics process, in order to continue to grow and become sustainable in a future without an unlimited supply of resources.
The demand for some organisations to move to a circular supply chain is driven by government and limitations on what products can go to waste and what must be reclaimed. That said, consumers stand out as the key driving force towards greener and more ethical, sustainable approaches.
Additionally, COVID-19 has exposed the fragility of long-distance, international supply chains. Building-in a level of resilience will see organisations seeking to work with a much wider range of suppliers – building out that ecosystem – from global corporations to smaller, regional start-ups to ensure business continuity, diversity and circularity in the supply chain.
Building a purpose-led ecosystem
The step-change that organisations must undertake to deliver against these sustainable and circular demands is now all about building purpose-led ecosystems. This means that organisations need to move beyond looking at their supply chain in a linear way, to actively collaborating with suppliers on initiatives to improve environmental, social and economic performance. They need to move towards a purpose-led procurement approach that includes a circular supply chain, and we will see adoption accelerate in 2021.
But what do we mean by a circular supply chain?
This is based on the principles of the circular economy, which is about designing waste out, circulating materials and resources and regenerating natural systems. The underlying premise behind the circular economy is that businesses will be more sustainable, more profitable and as a result add trillions to the global economy by 2030. The idea is that they are no longer reliant on the limited natural resources they required for growth. For businesses adopting a circular economy approach to be successful, their supply chains must also support these principles. According to Deborah Dull, who leads digital product management at GE Digital for Operations Performance Management, Supply Chain, Digital Kaizen, and Circular Economy: “Ultimately the circular economy is about inventory and extending its life, reusing it, repurposing it or eliminating the need for it altogether. Supply chain is responsible for inventory, and a global, circular economy requires supply chain innovation beyond its current scope which is very linear.”
How being lean helps
Deborah advocates that organisations should move to a lean supply chain approach because this moves inventory and decisions closer to the customer. This is important because proximity reduces the time between inventory decisions and actual customer need and because more inventory is typically required to buffer against uncertainty. Decreasing the time decreases the uncertainty, which decreases the need for an oversupply of inventory. Additionally, technology and data are key. Therefore, having a supply chain collaboration and innovation technology platform in place is important to facilitate collaboration in the supply chain, build in resilience and to give that all-important visibility into demand, supply, capacity and data.
In particular, data about inventory helps organisations make the best use of their existing inventory and reuse items as many times as possible. If the organisation cannot see their inventory, or if they lack the ability to easily move it around, they often end up duplicating inventory in different locations and buying an oversupply to prevent shortages.
Resilience and responsibility – watchwords for 2021
Going forward, it is entirely feasible that similar worldwide events to COVID-19 will cause major problems for organisations getting goods and products through traditional supply chain models, that are deemed too linear and don’t take a flexible, collaborative, diverse and a circular approach. Likewise, as government regulation and legislation increase, organisations will be forced to think about circular supply chains and more ethical approaches to how they dispose of raw and waste materials.
Therefore, repurposed supply chains of the future must have resilience and responsibility at their heart. Likewise, organisations must not only accelerate their agility, but also value chain transformation to help outmanoeuvre the ongoing uncertainty we face in 2021 and beyond.
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.
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.
“…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 businessprocurement initiatives, it’s really about driving economic impact. And it’s really the small businesses that drive economic growth in any economy”.
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.”
Unilever sets out new actions to fight climate change, and protect and regenerate nature, to preserve resources for future generations
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Unilever has set out a new range of measures and commitments designed to improve the health of the planet by taking even more decisive action to fight climate change, and protect and regenerate nature, to preserve resources for future generations. Unilever will achieve Net Zero emissions from all our products by 2039. We will also empower, and work with, a new generation of farmers and smallholders, driving programmes to protect and restore forests, soil and biodiversity; and we will work with governments and other organisations to improve access to water for communities in water-stressed areas.
To accelerate action, Unilever’s brands will collectively invest €1 billion in a new dedicated Climate & Nature Fund. This will be used over the next ten years to take meaningful and decisive action, with projects likely to include landscape restoration, reforestation, carbon sequestration, wildlife protection and water preservation. The new initiatives will build on the great work that is already underway, such as Ben & Jerry’s initiative to reduce GHG emissions from dairy farms; Seventh Generation helping Native American nations to access renewable energy; and Knorr supporting farmers to grow food more sustainably.
Alan Jope, Unilever CEO, explains: “While the world is dealing with the devastating effects of the Covid-19 pandemic, and grappling with serious issues of inequality, we can’t let ourselves forget that the climate crisis is still a threat to all of us. Climate change, nature degradation, biodiversity depletion, water scarcity – all these issues are interconnected, and we must address them all simultaneously. In doing so, we must also recognise that the climate crisis is not only an environmental emergency; it also has a terrible impact on lives and livelihoods. We, therefore, have a responsibility to help tackle the crisis: as a business, and through direct action by our brands.”
Fighting the climate crisis
Our existing science-based targets are: to have no carbon emissions from our own operations, and to halve the GHG footprint of our products across the value chain, by 2030. In response to the scale and urgency of the climate crisis, we are today additionally committing to net zero emissions from all our products by 2039 – from the sourcing of the materials we use, up to the point of sale of our products in the store.
To achieve this goal 11 years ahead of the 2050 Paris Agreement deadline, we must work jointly with our partners across our value chain, to collectively drive lower levels of greenhouse gas emissions. We will, therefore, prioritise building partnerships with our suppliers who have set and committed to their own science-based targets.
We believe that transparency about carbon footprint will be an accelerator in the global race to zero emissions, and it is our ambition to communicate the carbon footprint of every product we sell. To do this, we will set up a system for our suppliers to declare, on each invoice, the carbon footprint of the goods and services provided; and we will create partnerships with other businesses and organisations to standardise data collection, sharing and communication.
Protecting and regenerating nature
Unilever has been leading the industry on sustainable sourcing practices for over a decade, and we are proud that 97% of our forest-related commodities are certified as sustainably sourced to globally recognised standards. However, to end deforestation, we must challenge ourselves to even higher standards. This means that we need to have visibility on exact sourcing locations, and no longer rely on the mass balance system, which does not allow for accurate verification of deforestation-free when sourcing derivatives of our commodities.
We will achieve a deforestation-free supply chain by 2023. To do this, we will increase traceability and transparency by using emerging digital technologies – such as satellite monitoring, geolocation tracking and blockchain – accelerating smallholder inclusion, changing our approach to derivates sourcing, and making significant additional investment in derivative fractioning facilities.
We are also committed to working with the industry, NGOs and governments, to look beyond forests, peatlands and tropical rainforests, and to protect other important areas of high conservation value and high carbon stock which are under threat of conversion to arable land, with potentially devastating impact on the natural habitats.
In addition to continuing to drive sustainable sourcing and an end to deforestation, Unilever is setting out to help regenerate nature: increasing local biodiversity, restoring soil health, and preserving water conservation and access. To do this, we will empower a new generation of farmers and smallholders who are committed to protecting and regenerating their farm environment. Initiatives that we will drive include securing legal land rights, access to finance and financial inclusion, and development of restorative practices. This integrated approach will improve the livelihoods of smallholder farmers and give them leverage to drive the regeneration of nature.
Unilever is also introducing a pioneering Regenerative Agriculture Code for all our suppliers. The new code will build on our existing Sustainable Agriculture Code, which is widely recognised as being best-in-class in the industry, and it will include details on farming practices that help rebuild critical resources. As we have done in the past, we will make the Regenerative Agriculture Code available to any organisation that may find it useful – with the goal of driving change throughout the industry.
Unilever will also step up direct efforts to preserve water. Already, 40% of the world’s population is affected by water scarcity, and more than 2.1 billion people consume unsafe drinking water.1 We will implement water stewardship programmes for local communities in 100 locations by 2030. To do this, we will take the learnings from our Prabhat programme in India, which tackles water quality and supply risks around our factories. This programme takes a community approach to water management, and not only helps farmers across cropping seasons, but also addresses the basic human need for adequate and easy access to water. We will build a model for this water stewardship programme, and partner with key suppliers for them to also run similar programmes.
Unilever will also join the 2030 Water Resources Group, a multi-stakeholder platform hosted by the World Bank, to contribute to transformative change and building resilience in water management in key water-stressed markets, such as India, Brazil, South Africa, Vietnam and Indonesia.
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.
by Jeremy Smith, Managing Partner at procurement consultancy 4C Associates
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Beyond the human side of the Covid-19 crisis, the immediate issues felt by organisations have mostly been caused by unprecedented changes in demand. Revenue has usually either fallen off a cliff (non-grocery brick and mortar retail, leisure and hospitality) or it has surged (grocery, PPE, online non-grocery) causing problems in the supply chain. Some of these issues were exacerbated by a lack of transparency in the structure of these supply chains. The main priorities in this interim period are to restructure your cost and margin base and to align your full supply chain, while developing critical skillsets.
Building a cost and margin structure allows the business to survive until the crisis begins to fade. Ideally, the outcome is a transition of existing supplier commitments into the New Normal (when it comes) and thereby manage cash and risks. However, that may not always be possible but the key to success here is to review every commitment on its own merits and then engage with your suppliers to work out the most appropriate transition agreements. While this will help reduce the cost of change, you need to have strong supplier relationships in order to be successful.
We sometimes encounter a belief that suppliers either like you or see you as an important partner because they supply you. While this can be true, the changes that need to be made to your cost and margin structure in the interim, require real and much deeper relationships founded on an alignment of objectives. If you are in a position where this has been achieved already, you stand a decent chance of suppliers supporting your changes through their approach and commercial model. If you are still working on achieving that level of relationship, you might struggle or take longer to implement these changes, with all the implications this longer timeline has on cash management. It is times like these where we truly see the benefits of continuous supplier relationship management (SRM).
The second item to look at in parallel is margin management in whichever form relevant to your business (EBITDA, Intake, Gross or Net). At a minimum, you should consider your responses and action plans to these 4 key margin management questions:
How will your interim operating model and indirect cost base impact margin performance of your business?
Is your current product and service range appropriate to fulfil demand and safeguard commercial requirements?
If you have reduced headcount, either temporarily or permanently, are you more reliant on your supply chain? How does that flow through to your margins?
Do you understand your supply chain in enough detail to have visibility of all possible margin-impacting bottlenecks and constraints?
Supply Chain analysis
Typically, businesses will need 70% to 90% percent visibility into their end-to-end supply chains to proactively address choke points that can affect revenue and costs. However, currently most businesses only have 20% visibility into their full supply chains.
Clearly, this is not a desirable position to be in and must be remedied as quickly as possible. Some of the most critical supply-chain related issues include:
· Small suppliers, beyond tier 2, integral to the operation of much larger supply chains are at risk of going bankrupt due to cashflow issues
· Supplier staff may be constrained and supplier IP specific to your business is lost temporarily, or even permanently
· Excessive international movements of materials throughout the supply chain
A prime example to illustrate many of the above points is the personal protective equipment (PPE) crisis. Political arguments around levels of stock and UK-internal logistics challenges apart, the issues with getting enough PPE into the country have been caused by the supply chain. In hindsight, the dependency on Chinese manufacture pre-crisis was too high. Factories were already at capacity before COVID-19 appeared and clearly this pandemic was not factored into any sourcing strategies.
First these factories were locked down, then a travel ban was imposed grounding 75% of passenger flights, which contribute a lot of cargo capacity and thereby agility in supply chains. This means that though by Easter manufacturing was increasing, the ability to get it from China directly or through intermediaries was constrained. Taking a European view, PPE distributors and wholesalers have now exhausted their stocks and lead times for new orders are counted in weeks using expensive air freight or months using sea freight.
The implications from this example are that commercial and procurement managers need to understand their supply chains in a level of detail that has historically only been required for the most strategic suppliers.
For every tier and level of your supply chain, commercial and procurement teams should understand the liquidity position of suppliers, criticality of the outputs to your businesses, relative power positions and cost structures of fixed vs. flexible costs. Armed with this knowledge throughout your supply chain will allow you to make the correct decisions and ensure the continuity of supply chains. Additionally, it gives you the insights needed to identify new supply opportunities as contingency plans.
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.”
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:
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.
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.
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.
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”.
By Axel Schmidt With increasing regulation across all industries, from data privacy legislation to technical specifications and product certification requirements,…
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By Axel Schmidt
With increasing regulation across all industries, from data privacy legislation to technical specifications and product certification requirements, consistent traceability within often large and complex supply chains has never been more important for businesses to achieve. This is not only for compliance reasons, but also to ensure accurate forecasting so companies can deliver on promises made to customers.
Traceability ensures a
stringent flow of data so that suppliers and manufacturers can provide detailed
information about what happened to a product, by whom and at what time. This is
essential for industries such as the automotive industry, that may have to
recall a model due to a defect, or in the food industry where traceability is
vital to ensure food safety standards are upheld. But as industries move
towards longer and more fragmented supply chains, how can businesses keep up
with increasing demand for faster product turnaround combined with a growing
need for traceability? Axel Schmidt, Senior Communications Manager, ProGlove,
explains how wearable technology such as barcode scanners can help to
streamline supply chain processes and keep quality at optimum levels – not
only addressing the need for traceability, but also transforming worker
With new legislation coming
into effect, along with consumer demands for a wider range of products,
manufacturers will be required to handle and process an increasing number of
parts and components for assembly. This can present increasing challenges for
businesses, especially those that operate with complex product variants and
short product life cycles which can block the possibility of a fully automated
In addition, the rapid
growth of e-commerce business models may have simplified the retail world for
consumers, but in turn has increased the volume of work for vendors – by as
much as five times according to research. As businesses move closer towards
Just-in-Time supply chains, the focus and pressure is firmly placed on
logistics operations to deliver efficiency within the supply chain. Moreover,
the number of shipping formats available creates an added roadblock to
automation and the surge in demand for rapid fulfilment that comes hand in hand
with peak periods only adds further complexity.
Consequently, there is an
increasing need for organisations to seamlessly document what they do and how
they do it to meet compliance requirements. But this must not be at the cost of
adding any additional time to the already tight schedules organisations need to
adhere to in order to remain efficient and competitive.
In order to meet compliance
needs and unlock crucial efficiencies that can help businesses to meet
fluctuations in increased demand, organisations need to be able to access and
capitalise on real time data. Research from IDC
predicts that more than a quarter of data created will be real-time in nature
by 2025, and this is where barcode scanning plays a fundamental role.
The concept of barcode
scanning within the supply chain has been around for some time, enabling
companies to increase visibility by tracking items along the product journey
from manufacturer to the end point. Yet, the use of a conventional pistol
scanner is fraught with challenges, such as the significant time lost for each
worker due to the repetitive nature of picking up, using and holstering the
scanner for each individual item.
Given the format of the
traditional pistol scanner, the devices are also liable to breakages as they
are easily dropped to the floor. And as the devices are not ruggedised,
replacements are regularly required. This unreliability can be frustrating for
workers as well as the organisation, as workers cannot operate with optimum
Another drawback of the
pistol scanner is that it can be easily lost by workers. This could be around
the warehouse or factory but it’s also possible that a worker may leave the
scanner inside one of the boxes that they are packing. This is an unexpected
surprise for the customer, to say the least, but results in economic losses for
the company and further replacement scanners required.
technology with in-built scan functionality can deliver a number of benefits to
address these challenges. Minimising unnecessary and tiring repetitive actions
and improving accuracy significantly increases the volume of work undertaken by
each worker. With adjustable feedback options, such as acoustic signals,
vibration and LEDs on the back of the hand, a worker receives immediate
confirmation of correct product selection. This feedback not only minimises
delays and errors, improving productivity, but also avoids worker
Display screens can also be
connected to wearable terminals to provide workers with additional information,
such as the location of the next pick. Unnecessary activity is removed as every
movement is directly related to the task at hand. Through this augmentation of
the workforce, efficiency can be rapidly transformed.
evolution and customer demand create an urgent necessity for accurate and
efficient barcode scanning to deliver traceability and efficiencies within the
supply chain. Organisations must therefore consider the need to implement
solutions that streamline these processes whilst keeping quality at optimum
Supply chains will continue
to get longer and more complex, and many retailers face the challenge of
fulfilling their promises to their customers. In addition, fragmentation of
supply chains is also on the rise, with a number of suppliers and components
relied upon to work in harmony to make the entire supply chain function.
Wearable technology can be a critical link to deliver productivity and
efficiency and allow organisations to quickly adapt to fluctuations in demand,
giving them a much needed competitive edge.
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.”
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.
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.”
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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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.
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.
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.”
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.
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
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
Written by: Eman Abouzeid, Global Procurement and Supply Chain Professional Negotiation is a two-way communication skill. One person has one…
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Written by: Eman Abouzeid, Global Procurement and Supply Chain Professional
Negotiation is a two-way communication skill. One person has one price or idea in mind, while the other person has a different price or idea. Therefore, negotiation is defined as a discussion with the aim of ultimately agreeing on a price or outcome that is acceptable to both parties.
It may be that both parties get
100% of what they set out to achieve, or that one person gets exactly what they
want and the other person does not, or that a third outcome is agreed that goes
some way to meeting the requirements or expectations of both parties. Of
course, there will also be situations where the parties cannot agree and the
deal is not done.
procurement professional, you would probably associate negotiation with
commercial negotiations of price and other contract terms (payment, delivery,
quality, and so on). However, negotiation is a fact of life, everyone
negotiates something every day. Negotiation is a basic means of getting what you
want from others, it is a back-and-forth communication designed to reach an
agreement when you and the other party has some interests that are shared and
others that are opposed.
partly an internal process (e.g. when buyers negotiate with user departments
over the details of a requisition), and is partly external process (e.g.
negotiations between buyers and external suppliers).
In this article, we will explore
the process of negotiation and some of the techniques that can be implemented,
in order to ensure having an effective and successful negotiation process with different
typically follows a set process with the following five key steps:
1. Preparation and planning
Both parties will prepare and
research the information needed to confirm their position. They also need to
consider the history of the negotiation – how they got to where they are today.
It is important to consider what the desired outcome will be but also to
consider the starting position for the negotiations – price, terms, etc.
2. Defining ground rules
Each party needs to know what is
expected of them, for example, by deciding:
the negotiations will take place.
are any time constraints.
are any issues not for considerations or off limits.
will happen if an agreement is not reached.
3. Exchange information: clarification
Each party explains their
position. In the case of a supply contract negotiation, the buyer will describe
what they want to purchase, and the seller will describe what they offer and
what the benefits will be for the buyer. Having prepared thoroughly for the
negotiations each party should have all the information required to educate the
4. Bargaining and problem
This is where the
‘give-and-take’ of negotiation happens. It needs to be an open exchange with
both parties seeking a solution that will be worthwhile for each other.
Eventually, they should agree on
The ideal solution should be a
‘win-win’ situation where each side feels they have achieved something that
satisfies both parties’ interests; in this case, they may build a lasting and
However, where the buyer has the
power and there is an alternative supplier that will fully meets the buyer’s
needs then there is nothing wrong with a win-lose for the buyer. Not all
transactions require collaborative and long-lasting relationships.
5. Close: commitment and
This step is about clarifying
the agreement and starting to put in place what has been agreed by recording
the details, including the timescale, and how it will be implemented.
In a business environment there
is likely to be a contract which each party will need to sign. There may be
some further negotiations over detailed terms of the contract that may not have
been covered in the main negotiation process.
In your negotiations with others
you will encounter several different approaches, which may be related to the
negotiator’s personality, or related to the context and circumstances of the
negotiation. You can consider these as being on a scale of hard and soft,
and open and closed as demonstrated below:
and challenging negotiator.
Soft: easy to
get along with but may say ‘yes’ just to avoid conflict.
trusting and open – and assumes others to be the same.
Closed: may be
cautiousandapprehensive about sharing any information.
will listen to the other party, but may still stick to their position.
trust and follow the other party.
may stick to a rigid stance.
but willing to listen.
important to be aware of your own style as well as that of the person you are
negotiating with, when you are willing to adapt, you will achieve the best
How to handle negotiations successfully:
keep in mind the following advice and tips on how to deal with the negotiation
and observe the other side’s point of view.
do not listen carefully, you could miss opportunities.
skills are helpful for assessing the situation as negotiation progress.
also useful when problem solving if negotiations reach a blockage.
careful control of your emotions even if other negotiating parties become upset
promise something that cannot be achieved.
succeed you must be able to clearly and effectively put across your position to
the other party.
respect the other party and be patient with them, even if they are not patient
other party may need to take more time than you would like to consider your
calm and in control of the situation to maintain a good business relationship.
problems, issues, risks and challenges when they arise.
try to evade them – work out a solution.
someone (or a group) to do something that you want them to do.
The main criteria of effective negotiations:
is considered as an “effective negotiation” if it has the following four
negotiation has produced “a wise agreement” – one that is satisfactory for both
sides, and divisive issues are satisfactorily resolved.
negotiation is “efficient” – no more time-consuming or costly than necessary.
negotiation is “harmonious” – fosters rather than inhibits good interpersonal
relationships or business partnerships” are preserved or even enhanced.
“the art of letting the other person have it your way!” you should get the deal
you want whilst making your opponent feel the same.
victories will not create long-lasting business relationships. Both sides must
leave the negotiation table believing that they have gained. Therefore, no
skill is more central to your professional career than the skill of
negotiation, and as negotiations expert Chester L. Karrass famously put it, “In
business, as in life, you do not get what you deserve, you get what you
hope this has been of interest to you and furnished you with some knowledge to
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
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.
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
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
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.
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
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.”
Over cover story this month features Jill Robbins, Senior Director, Global
Procurement of Indirect Goods & Services at Elanco, the animal health
enterprise. In an absorbing interview, Robbins outlines how a procurement lens
enables smarter business growth.
“Procurement has a unique lens and insight into
all aspects of the business,” she says. “There are always going to be people
that do not understand the value of procurement… but we see opportunities and
connectivity across the value chain that others may not be able to see that
drive enterprise efficiency and productivity.”
Elsewhere, we speak to Anis Tabka, CPO at UAE
telco du to talk about the challenges to procurement transformation. “A lot of people aren’t coming from the supply chain background.
They have technology experience or administration experience and just assume
that procurement is simple price squeezing and handling of contracts,” he
explains. “I always try to tell them that there is so much more to
Plus, we have
articles focusing on procurement at Roland Berger and The Cost of Holding
Inventory, alongside the best events and conferences around, and the Top 5 takeaways
from the CIPS procurement salary report.
Part four of a six-part supply chain masterclass with Frank Vorrath, Executive Partner of supply chain at Gartner. Frank explains…
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Part four of a six-part supply chain masterclass with Frank Vorrath, Executive Partner of supply chain at Gartner. Frank explains how to build a supply chain excellence operating system, enabled by a centre of excellence.
One of the key things identified within your concept of a supply chain excellence operating system is two-directional thinking, where you’ve got people working in the business and people working on the business – could you elaborate on that, please?
Transformations are really driven by future growth ambitions of those organisations, or if they are looking and expanding into new areas and new business models. Lots of things are changing very fast and exponentially. If you look at that, that sets limitations for organisations to actually do the same things as they did in the past. From a structural point of view, your current capabilities won’t allow you to compete in the future. You have to think about how you are going to approach that.
There’s also a limitation in terms of resources. The concept of perform and transform is simple to understand, which means you still have to focus on your core business and create results and good performance, while at the same time transforming. The concept is almost like running a sprint and a marathon at the same time. If you think about what you can do with the same setup and structure you have without investing, and potentially a different set of excellences, then it’s probably stretching your current resources to a limit.
If you think about the transform activity you
have to do as an organisation, you think more about what you need to do to be
successful in the future. If you think about the sprints, you still have to
focus on your core business and on day-to-day good performance, and you also need
to think about what enables you to perform day to day, running these sprints,
making sure you keep and stay focused on delivering performance end results to
your business and to your customers as well meeting their objectives and needs,
but also transforming the organisation at the same time and building the new
muscles you need in the future related to the capabilities.
What sort of
challenge does this balancing act, between the two areas, present?
If you do that with your current resources you have available in your business you may find yourself in a position that is too much a stretch for your resources: to be able to deliver on your expectations. Somewhere, you need to balance it. The question is can you balance that with your existing resources and the existing structure you have, or perhaps you have to set up a different structure – where you have people working in the business and people working on the transformation. Both are equally important to you as a business because one is really keeping the lights on and delivering the performance you need today, which is finding the capabilities you have to build for the future. That needs to be balanced. Is it easy? Probably not. But is it required? Absolutely.
change management come into the equation?
With change management and transformations, it’s really shifting the mindset and the behaviour and actions towards generating more an improved and sustainable business performance and results. It’s about having clarity of the destination, and a clear understanding of why are you doing this, and what you want and need in order to transform.
The next important part of change management is role modelling. Your leadership plays such an important role here in championing the transformation with clear and defined specific communication and milestones. Taking people along with you on this journey and having an understanding of ‘walk the talk’, and being visible and aligned on a leadership level creates the pull in an organisation.
There’s also organisational capabilities, the resources I need, the financial commitment that an organisation has to make to transform, because it can be dependent on the maturity of that organisation. Sometimes you have to be able to invest first to generate the benefits later on. You have to be able to have governance in that model, which is strictly focused on priorities for the business as an outcome and is steering the organisation through that transformation. The culture and the mindset of the people, the knowledge and skills have to be in place, and it has to be somewhere measured and sustained.
Also, you have to be able to reinforce. How do you align your goals and objectives and your incentives structures on the two important activities, perform and transform, in a balanced way? Not just incentivising generating results today, but also incentivising transforming the organisation to be able to compete in the future. It’s not just continuous improvement. It’s building an operating system, considering what drives change, creating push and pull in an organisation, and really with the mindset of the future to improve, as well as building muscle, creating sustainable business performance and end results, and meeting the never-ending customer expectations in future.
How does a
role model approach help overcome the challenges in change?
It has to start at the top of an organisation, which means you have to be very clear, very concise and compelling. People need to understand why you are doing this, and be very clear about the outcome, when you want to do certain things, and what it’s actually going to do for the organisation. Take people along the journey and bring them in a way in that they have a stake in the game, so they are able to participate and provide their input into the transformation. That’s really important when you start your change management and transformation.
You also have to somewhere create an excitement
factor for your people to believe that the future you’re going to create for
them is a future where they want to be part of, where they want to be proud of,
so they are excited to actually take you as an organization forward into that
How do you
bring the customer into the conversation?
It’s key to incorporate customers into it. Don’t
be shy in asking your customer how can you serve them better. How can you
create more a collaborative joint partnership together? It’s no longer about
vendor and supply and customer relationship, it’s about a partnership on a more
strategic level. As a business, if you’re able to figure that out and bring
your key customers in, listen to them and make them part of it, or even make
them a joint development in terms of building an operating system, even better.
You may want to consider joint investments into building the capabilities you
need in future, especially in areas when it comes to looking into talent related
to emerging technologies, data, data scientists, etc.
You really have a scarcity and you have to build and think about how you want to build these kinds of talents in your organisation from a different perspective and different ways. You may want to do this jointly together with your customers, because they probably have the same needs like you have in their own business, and the same kind of limitation and challenges to find the right talents. Instead of just doing it on your own and being completely internally focused, combine the inside out with the outside in. The key in that is your customer or your customers.
important is it to develop an end to end supply chain IT strategy and
technology roadmap so that the technology and the procurement transformation
You have to have an end-to-end view of your technology. Technology can’t be seen in isolation with what you are trying to accomplish with the strategic objectives of your business related to the value proposition you have. Technology and digitalisation, you can be taken from two angles and that’s what I’m seeing currently happening in the marketplace. On the one side, you see companies focusing and creating new business models through digitalisation related to their products and services, selling outcomes and solutions instead of selling products and devices.
On the other side, you see a lot of activity in terms of digitalisation in the supply chain. These two things are connected, but we also know that 70% of the initiatives currently in the marketplace are disconnected. Technology is creating new business models, using data to access and provide insights to your business for better and informed decision making. Data could also mean monetising that data and creating new business models. Technology, from your business process optimisation point of view, can create a new level of maturity in terms of efficiency.
That’s where a lot of companies are focusing on and deploying new technologies because they want to figure out if there are business benefits they can introduce to the business and to harness new capabilities and with automated processes that reduce time, errors, cost, and also increase the efficiencies they have in their business. To be able to do that, you need to have a blueprint and an understanding of where you are at currently with your technology landscape and your applications, and also where you want to grow in the future.
What is the overall journey of this centre of excellence system, where it starts with developing infrastructure, building supply chain excellence capabilities, and then reaching a stage where that supply chain excellence is woven within the organisation’s DNA?
The ideas of transform and perform, and the
resource constraints that organisations are having by using the same resources
has been recognised in the market widely and you have seen over the last couple
of years more and more organisations actually building a centre of excellence.
With a centre of excellence, you have to consider that there are different
centres of excellence. Now you have to have a functional centre of excellence
where you just focus on building the maturity in certain areas of your supply
You could also have a logistics centre of
excellence. You could have other centres of excellence, like a manufacturing
centre of excellence. The goal is to design your centre of excellence and be
aligned with the main activity across your whole value chain, which means if
you are a manufacturing organisation and a supply chain organisation or procurement,
you would organise your centre of excellence in a way that would incorporate
the strategy element into that. There are different ways of structuring a
supply chain centre of excellence.
My recommendation, if a business can afford it,
would be to focus on end to end, rather than just functional, because if you
just focus on functional excellence, again, your integration and collaboration
across the different functions might be a bit of a challenge.
excellence an ever-moving target?
You always have to work on that. You’re never
done. If you really think about your
plan of a transformation, does it stop after three years? No, it’s not going to
What you’re hoping for when you had enough momentum, excitement and generated the results, is the building of a culture and a DNA. That is probably the longest part of a transformation which is never-ending, because if you think about it from a leadership point of view, when you build it with your team and operating system, you want to build something which is sustainable and not dependent on you as a leader or your team. It should be there, even if you move on. It should be part of the culture so that people and generations after can still build from what was built, to make it better.