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.

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 best procurement schools in Europe.

As procurement becomes an increasingly vital and strategic function within many organisations, people are beginning to realise the full potential of turning it into a career for themselves.

This has subsequently led to many universities noticing the demand in the industry and offering courses which equip students with the relevant qualifications and skills needed to succeed in the supply chain space.

With this in mind, here are five of the best procurement schools in Europe.


Course: Various
Where: Across England

procurement schools

Run by Oxford College of Procurement and Supply, there are 10 Chartered Institute of Procurement and Supply centres in England offering several different qualification levels to choose from. The courses are recognised throughout the world as harnessing leading edge thinking and professionalism across the procurement and supply chain management space.

CIPS offers courses such as level three, four, five and six in procurement and supply with each qualification created to reflect current, emerging and best practice in procurement and supply chain management. Classes focus on exploring legacy purchasing and supply methods as well as techniques and theory to the application in a business environment.

CIPS doesn’t just offer in-person studying as courses are designed to suit individual lifestyles with virtual classrooms, part-time and weekend options to choose from.

2. Politecnico di Milano

Course: MSc in Supply Chain and Procurement Management
Where: Milan, Italy

Politecnico di Milano
Politecnico di Milano offers an extensive portfolio of programmes

Renowned as being one of the best scientific and technological universities in the world, Politecnico di Milano offers an extensive portfolio of programmes in a variety of different spaces. Its supply chain master’s degree is a 12-month course aimed at equipping students with vital knowledge and skills needed to succeed in the industry.

The course also includes a number of practical activities in the programme such as lessons with international lectures, workshops on soft skills, company presentations, projects with companies, company visits and an international study tour in Rotterdam.

According to Politecnico di Milano, 86% of students were employed three months after graduation while 55% were also working abroad during the same period.

The course was ranked third in the TOP 2021 Eduniversal Best Masters Ranking (Global) and eighth in the QS Supply Chain Management Masters Rankings for 2023.

3. SKEMA Business School

Course: MSc (and MS) Supply Chain Management and Purchasing
Where: Lille and Paris, France

Skema offers two supply chain management (SCM) and procurement masters: The premium international MSc Global Supply Chain Management in Lille taught in English, and the MS in SCM and Purchasing in Paris and Lille mainly taught in French. France’s highly-rated supply chain and procurement program has been designed with a progressive shift from theory to practice. The degree covers the entirety of supply chain activities from planning, purchasing, receiving, production, storage to delivery through nine compulsory and six elective courses.

The global MSc has a new cooperation with the leading prestigious business school, MIT in the US, plus another cooperation with Politechnico from Milano. The MSc master’s degree provides soft skills in supply chain and purchasing management as well as going into future trends in digitalisation, AI, sustainability, ethics, globalisation, risk management and agility. The course’s primary goal is to find future leaders who are seeking to make a positive impact on the world of supply chain management and procurement. The MSc is a full time program, complemented by paid internships in the area of the student’s choice, while the MS alternates weeks of classes with professionals at the forefront of their fields.

4. Audencia Business School

Course: MSc in Supply Chain and Purchasing Management
Where: Nantes, France

Audencia Business School

Created in 2009, Audencia Business School’s programme will cover topics such as procurement, global sourcing and supply chain strategies. Other topics to feature includes green logistics, Big Data, digital transformation, negotiation and commercial law. The course will provide expertise from industry insiders as business executives visit and share professional insights during the programme.

The school works closely with the corporate world and is recognised for its responsible management practices. Audencia is triple-accredited, highly ranked and internationally oriented and according to its website, 79% of course graduates are employed before graduation. The course is available as a one-year or two-year master’s programme.

In autumn 2024, the course is set to be renamed to the MSc in Responsible Procurement and Supply Chain Management.

5. Cranfield School of Management

Course: MSc in Procurement and Supply Chain Management
Where: Cranfield, United Kingdom

Cranfield School of Management provides students with specialist knowledge and skills in procurement needed to progress their careers

Cranfield’s Procurement and Supply Chain Management course has been co-designed with senior industry executives. This purchasing postgraduate course provides students with specialist knowledge and skills in procurement needed to progress their careers. Possessing one of the largest facilities in Europe, the course places considerable emphasis on how to overcome real-world challenges.

Students will gain an in-depth understanding of supply chain strategy and sustainability, procurement strategy, supplier selection and evaluation, negotiation and contact management. They will also be taught how to use data, models and software to solve problems and inform decisions, inventory and operations management and how to design effective supply chain operations.

Students will have the opportunity to attend a study tour and experience a different supply chain perspective elsewhere in Europe.

The course was ranked 11th in the world on the QS Supply Chain Management Masters Rankings for 2023.

This month’s exclusive cover story features Nathan Fisher, Executive Vice President, Chief Procurement Officer, at Hexion, who reflects on a global procurement vision that empowers people to make sustainable change…

As the year continues to fly by, we continue to bring you some of the biggest stories tackling the real heart of the procurement and supply chain landscape, and this month’s cover star is a true testament to that. 

Read the latest issue here!

Nathan Fisher, Executive Vice President, Chief Procurement Officer, at Hexion, has a story that might make you do a double take. In a world where we are constantly moving from job to job, delivering transformation projects, realigning procurement functions and moving on to the next challenge, Nathan has been at Hexion for 15 years. Why? A commitment to results, responsible procurement and most importantly – investing in people. 

“I love to develop people,” he says. “I like to coach them and I enjoy watching others develop, move up and move on, and achieve success (…) Hexion knows this and truly values their leaders and they want them to succeed and they want them to stay.”

Be sure to read this incredible interview as Nathan tells us that one day he would love to pick up a copy of CPOstrategy and find one of his own prodigious talents gracing the front cover! 

Elsewhere, Brish Bhan Vaidya, Head of Strategic Sourcing & Supply Chain at Uber APAC, why procurement is even more important to the ride sharing company than you think, and how it continues to drive the transformation of the business.

We examine the results of Procurious’ How Now survey on the impact of COVID-19 on supply chains, and what’s next for procurement and supply chain leaders, we have part one of a fantastic Q&A on the future of procurement, and Dave Brittain of Amazon Business tells us why procurement should be the hero in your business in digital transformation. 

Enjoy the issue!

Dale Benton | Editor | CPOstrategy

Unilever sets out new actions to fight climate change, and protect and regenerate nature, to preserve resources for future generations

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.

Nick Pike, Chief Revenue Officer at Vizibl discusses how companies should find their new normal, build supply chain resiliency and innovation and how there are no second chances if your supply chain is not reliable.

Innovation in procurement technology has not moved on much in the past decade, however the impact of COVID-19 and supply shortages expected as a result have certainly focused minds and shone a light on procurement sourcing. In fact, according to the UN’s Deputy-Secretary-General, Amina J. Mohammed: “Companies should focus on scaling up production, making sure supply chains are reliable.”

Finding the route to the ‘new normal’

What we are seeing is that organisations are trying to get a handle on the route back to the ‘new normal’ and emerge out of this crisis stronger than before. This means we will see a couple of years of real accelerated change, in fact according to Arvind Krishna, CEO of IBM, COVID-19 is likely to push companies to speed up their adoption of modern technologies like artificial intelligence and cloud.

For many procurement and supply chain professionals, the dramatic events of the last couple of months – including lockdowns, quarantine, production stops – were a wake-up call. Following the firefighting mode during the pandemic, companies have realised that they can no longer afford to be unprepared for such an event in the future.

Building resiliency into the supply chain 

Securing the supply chain to ensure that it is not negatively impacting the ability to meet customer commitments will be crucial. CPOs & CSCOs will want to know if there are any supply chain issues so they can quickly source alternative solutions. They also want to know what projects they need to prioritise following the crisis because, compared to earlier in the year, priorities have more than likely changed.

CPOs will be keen to understand what key projects they need to undertake to drive the organisation’s revenue and success. Outside of this, CPOs & CSCOs will also be looking at how to extend and enhance their supply network and how they can better understand their dependence on that network. Ultimately, short term they will be looking at how they transform their supply chain risk management processes and build in resiliency to not only survive but thrive. 

To this point, Deloitte recently published an excellent overview around managing supply chain risk during COVID-19, and I would highly recommend this report to anyone involved in developing improved supply chain practices for their business.

Resiliency will be the post COVID-19 watchword

This need for resiliency provoked us to develop a bespoke version of our Vizibl Supplier Collaboration and Innovation solution (Vizibl Resilience) that focuses on the need for companies to address these issues. We expose the critical projects that customers need to work on in the supply chain and have easy to use dashboards to be able to report critical information to the Board.

It is important to ensure that everyone is sharing information in an efficient way rather than individual-by-individual via email or phone. Businesses need to have the right collaboration technology to underpin their procurement sourcing, to solve problems faster. For many CPOs working remotely with their teams, perhaps for the first time, this level of shared visibility is vital.  

Vizibl Resilience ensures that all communication, actions, and results from vendors working throughout the supply chain are captured in real-time within a single, easy-to-navigate platform. Dashboards give the leadership team transparency around where the business is at in any point in time on any number of projects. This enables the organisation to identify any issues within those projects and quickly triage those that need attention.   

Building supply chain innovation

Of equal importance to visibility, collaboration and control is building innovation into the supply chain. 

If we look at an industry such as telecommunications and take Vodafone as an example – historically, generating revenue for the business has been very network bandwidth-orientated. Now Vodafone and its peers are required to build additional services on top of these networks, enabling them to differentiate. We are working with Vodafone looking at the new projects and innovations which are coming from their suppliers such as Huawei, Google, Nokia and establishing how Vodafone can bring those to market faster. We have been helping them to identify which ones are aligned to their business goals and how they can accelerate these projects.  

Removing costly duplication  

But what we have seen historically is that as companies start to do this, so duplication creeps in. Often, we find that a very similar project is happening in a different part of the organisation at the same time. By deploying Vizibl, we are able to shine a light on the duplication and show that elsewhere in the organisation there are two or three projects which are the same or very similar, which could be brought together.    

While saving money is one aspect, the other aspect is about getting various project teams to collaborate and get projects to market faster. 

No second chances

In just a few months, COVID-19 has triggered sweeping changes in how we all do business. This massive scale disruption created a succession of different supply chain issues. These issues are not necessarily new, but what has changed is that, going forward, not being prepared for such issues is no longer an acceptable position. With supply chains firmly in focus boards are pushing for a more proactive approach and level of insight and visibility.

Now the CEO will be asking the CFO, COO and CPO: is the supply chain prepared? During the pandemic, companies scurried to secure supply. During recovery, the CPO needs to initiate measures that lead to preparedness. They’ll be no second chances for CPOs going forward. This means being prepared must be an integral part of sourcing and supply chain management.

Black Friday is fast approaching, but retailers have been preparing for this event since last year – or they should…

Black Friday is fast approaching, but retailers have been preparing for this event since last year – or they should have been, according to Gartner’s Vice President Supply Chain EMEA, Frank Vorrath.

“This is not the first Black Friday event,” said Vorrath, in an interview with The Digital Insight podcast. “Learn from the past: use data from previous years and look at what it tells you about the peaks and demands.”

“Black Friday is a special event, so use that data to make a prediction for the next one. This is an important consideration when it comes to your ability to respond to demands.”

“To help this, make sure your environment is prepared to collect as much data as possible throughout this event.”

Planning and making educated predictions are recurring themes when it comes to advice on making a success of Black Friday, but Vorrath is also keen to place emphasis on widespread collaboration.

“Work with your partners, both your logistics providers and your other providers such as outsourced manufacturers and suppliers,” said Vorrath.

“Consider that the activities on Black Friday will not only be about selling your products but also delivering them to your customers. When you sit and collaborate with your partners, you will have better outcomes.”

All this preparation, however, could go out the window if there’s more demand than expected.

“Consider risk mitigation. Things may happen that result in more demand than you ever legislated for, so consider increasing the risk mitigation to avoid being on the backfoot when demand over exceeds your ability to respond.”

Don’t miss out – subscribe to The Digital Insight today!

Welcome to the September issue of CPOstrategy! Read the latest issue here! Over cover story this month features Jill Robbins,…

Welcome to the September issue of CPOstrategy!

Read the latest issue here!

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 procurement.”

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.

Enjoy the issue!

Part four of a six-part supply chain masterclass with Frank Vorrath, Executive Partner of supply chain at Gartner. Frank explains…

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.

Prefer this in an audio format? Listen to the Digital Insight podcast!

Frank Vorrath, Executive Partner of Supply Chain at Gartner
Frank Vorrath, Executive Partner of Supply Chain at Gartner

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.

Where does 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 future.

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.

How important is it to develop an end to end supply chain IT strategy and technology roadmap so that the technology and the procurement transformation are aligned?

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 chain.

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.

Is 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 stop.

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.

Read August’s issue of CPOstrategy!

Welcome to July’s packed edition of CPOstrategy! Read the latest issue here! Our cover story this month, features David Medori,…

Welcome to July’s packed edition of CPOstrategy!

Read the latest issue here!

Our cover story this month, features David Medori, Chief Procurement Officer at William Hill who reveals how strategic procurement is aiding the global gaming giant…

During 2018, 600 million bets were placed with William Hill, further establishing its reputation as a world leader in gaming. Employing more than 15,500 people in 10 countries, the 85-year-old bookmaker and games provider is continually innovating new and engaging ways to bet and game, whether in shops, sports books, online or mobile devices.

Leading a procurement function in this world-renowned brand and operating on varying platforms in differing geographies is no easy task, whether your requirement is software, hardware or professional services. William Hill’s Chief Procurement Officer, David Medori, is responsible for procurement of all third-party goods and services, covering indirect and direct procurement. We met up with David at William Hill’s brand-new headquarters in Tottenham Court Rd, London, to see how the procurement function is transforming under his leadership…

Elsewhere, we spoke to Edgar Lim, Vice President of Technology and Procurement at EnterSolar to explore how a sound procurement philosophy achieves growth in a “solar-coaster” market. Jon Hansen tells us the 3 Obstacles To Digitally Transforming Your Supply Chain and we also catch up with Tradeshift co-founder Gert Sylvest, and CPO Roy Anderson, who reveal how their global open business platform is transforming the future for buyers and sellers.

We also list the top 5 key influencers in procurement and reveal the biggest events and conferences from around the globe.

Andrew Woods

With direct access to audiences across a global stage, social media has redefined the idea of influencers. Looking to tap…

With direct access to audiences across a global stage, social media has redefined the idea of influencers.

Looking to tap into and explore this ever-growing resource, industry giants have their very own influencers steering and engaging the conversation. CPOstrategy looks at 5 leading procurement influencers as ranked by ProcurementiQ

Kelly Barner, Owner and Managing Director – Buyers Meeting Point

As the owner and manager of Buyers Meeting Point, Barner has spent the last decade providing the procurement industry with an unmissable events calendar, a blog that captures the current procurement discourse, a huge social media network, and a uniquely engaging podcast. Barner is the voice and the influential figure behind one of the most trusted sources of information for procurement practitioners and solution providers alike.

Lora Cecere, Founder – Supply Chain Insights
Supply Chain Insights, of which Lora Cecere is the founder, is one of the most trusted resources of independent, actionable and objective advice for global supply chain leaders. Since the foundation in 2012, Cecere has sought to pave a new direction in building thought-leading supply chain research.

Tom Derry, CEO – Institute for Supply Management

CEO of one of the largest not-for-profit organisations in the supply chain world, the Institute for Supply Management (ISM), Tom Derry oversees the provision of market intelligence, certification, training and professional development to procurement and supply chain practitioners from all over the world. Derry also sits on the board of the Society for Human Resource Management (SHRM), a leading voice in addressing the evolving challenges in today’s workplaces.

Omid Ghamami, CEO and Chairman of the Board – Center for Purchasing and Supply Chain Management Excellence
As CEO of the Center for Purchasing and Supply Chain Management Excellence, Omid Ghamami is the spearhead of the world’s most advanced, interactive and prestigious purchasing & supply chain management certification system. Calling on his extensive experience in managing purchasing and spend for global tech giants Intel, Ghamami works with some of the biggest companies in the world to foster a new order of supply chain management, one that sees organisations recognise the true value-added centre of profit that it can be for their business.

Dawn Tiura, CEO & President of Sourcing Industry Group (SIG)

The CEO of Sourcing Industry Group (SIG), Dawn Tiura drives the vision of creating a premier global sourcing association that provides thought leadership and networking opportunities to executives in sourcing and procurement from Fortune 500 and Global 1000 companies. Tiura describes herself as a passionate leader of SIG, going above and beyond to raise the executive presence of sourcing, procurement and outsourcing professionals. Since joining SIG in 2007, Tiura has truly “revolutionised” the group in order to establish itself as the premier global sourcing association.

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

Click here to read it!

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

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

Enjoy the issue!

Kevin Davies

A global leader in procurement and supply chain, Sam Achampong is Head of CIPS MENA, and responsible for influencing supply…

A global leader in procurement and supply chain, Sam Achampong is Head of CIPS MENA, and responsible for influencing supply chain and procurement transformation across the region.

Listen to the podcast here!

So, could you give us a brief outline of your role at CIPS MENA?

CIPS works in a number of ways. I guess if you look at a triangle, there’s three main areas we work in. One is education, and that’s around our qualifications. Another is around thought leadership in terms of the events and social networks we create. The other is around our B2B operations where we work directly with organisations to work on the capability development of their own procurement teams, and their procurement organisation.

The operation in the Middle East has been around for about 10 years now. In terms of the region, I think we acknowledge that the level of maturity in procurement is in many ways a little bit behind more established areas of the world. But over the past 10 years that gap has been closing. So, we’ve seen some significant strides in terms of how people view procurement, and how strategic people see procurement. However, there remains a lag in recognising it as a strategic function. We continue to work with organisations and individuals in this region to improve that.

What are the challenges procurement is facing in MENA at the moment? Skill shortages or technology uptake?

So, it’s a bit of both. There are skills shortages, because there is a lack of people who have those commensurate professional and strategic skills in procurement in the region. So, let’s call them licensed procurement professionals; people who are actually qualified in procurement practice, and who have the skills in that function. So, that’s a skills gap that only CPOs in the region will acknowledge.

The other thing is the recognition of the profession itself. So, when you go above the actual stakeholders around procurement, your CFO, CEOs, the C-suite and others, the recognition of procurement as a strategic function is lacking in many ways here. So, what that means is, you find that a lot of procurement departments are being used as transactional departments, who are either performing a compliance role, or a simple transactional role. So, that obviously diminishes the role of procurement and diminishes the effectiveness of what procurement can deliver in this region. really is a lack of depth in the market of people who have those skills when they are called upon. So as a result, you cannot look to a major organisation or a particular job description, procurement category manager, for example, in a major bank and assume that they have the necessary skills that you would expect a procurement IT category manager to have. Because there just isn’t that depth of skills in many areas.

However, as I’ve said, there have been big strides over the past five to eight years to improve that. So, there are real centres of excellence around the region who have been working for a long time to overhaul their entire departments. You’re talking about some of the major organisations like ADNOC, the major oil company, or SABIC in Saudi Arabia, around to Etihad Airways in Abu Dhabi, who’ve been working very hard for a few years to ensure that procurement becomes a strategic function, and that the people who work in it are professionals.

Would you recommend more professional qualifications being introduced in the region?

Yeah, that’s the other side of it. So, there is looking for people in the market who already have those skills, that’s one side of it. The other side is putting together the infrastructure, whereby people are able to get hold of those skills. So, that’s the backbone of what we’re trying to do. We set up several study centres across the region where people can go and study CIPS qualifications anywhere around the region from Lebanon, to Bahrain, to Saudi Arabia, to the United Arab Emirates, to Egypt. In addition to that, we’ve worked very closely with a lot of organisations to set up in-house procurement academies, whereby we work directly with them to upscale their teams to the highest level over a period of time. There are two areas in which we work. One is the B2B, and the other is just for the B2C where you have the student network and the individuals who want to attain those skills.

We’re working with a lot of the educational establishments to work with them to ensure that procurement qualifications, skills and standards are available in the local university network. So, we’ve done that across the region, where we work with centres of education, to help them put in place skills and qualifications that are commensurate with leading procurement practice.

I guess, the other side is away from the people. It’s a case of how people actually do procurement. So, what are the strategic games, what are the processes, practices? We’ve also worked with several organisations to provide advisory services to look at how they actually do procurement and guide them into putting into place procurement practices that are leading practices to help achieve value. You’ll see organisations like the Dubai Expo 2020 project, who have recently gone through what we call the CIPS Procurement Excellence Program, where we review how they do procurement and guide them towards best practice.

Have you encountered a stark contrast between, broadly speaking, the Middle East and the North Africa region?

In the Gulf, you will find real centres of excellence and some real heavyweights in the public and private sectors, who have invested in putting together skilled procurement professionals, and invested in how their departments manage procurement strategically. So, you will find some very educated and strategic people.

When you look more to North Africa, Egypt is a very populous and academic country. So, you do find a lot of people from the academic perspective, who have come through a level of education to attain procurement skills; maybe not to the highest level, in terms of strength and depth, but that’s the angle that happens in North Africa rather than companies sponsoring people to go through qualifications.

West Africa, again, is slightly different. You have countries in West Africa, like Ghana, who are working very hard now to establish procurement centres of excellence among the public sector. So again, we’re working very hard with them to put in place structures that defend how they build up the reputation of good public procurement within those areas.

So, there are differences between the Gulf, North Africa and West Africa and several subtleties between the public and the private sector. But interestingly, I think what’s happened over the years is that there’s always been a gulf in the maturity levels of the practice of procurement and many other professions. What’s happened over the last two or three, or three or four years is the advent of technology. So, there’s an element now where people are looking to leap frog the long route of getting people highly qualified and educated in procurement and are instead trying to invest in technology to do that procurement for them, which makes sense to a certain perspective. But obviously, the caution has always been to make sure that whoever is working on procurement for you, in terms of people, are highly skilled commercial managers, because it’s clear that you cannot rely fully on technology.

I can recall one particular instance where the prerogative was to try and eradicate as much as possible, the ethics and procurement fraud from the procurement life cycle. So, the solution that was being implemented was a whole-scale eSourcing suite, which is a good idea in terms of transparency. But of course, the fact is that probably 80% of procurement fraud is carried out at the specification stage. So, you still do need to work on the people, otherwise, you’re not really eradicating the problem.

You touched upon ethics, and obviously transparency within the supply chain is a hot topic globally, so I guess within MENA, building trust is a very important part attracting foreign investment, for example…

I think you’re right, and for any country or region that’s looking to attract foreign investment, it’s incumbent on them to create an environment conducive to that investment coming in. And key to that is procurement, the reputation of how business is done, and how supplies interact, and how organisations are gained through those transactions across the supply chain to obtain value is absolutely crucial to attracting investment.

So, ethics is key. We work with a number of organisations across the region, specifically on that subject. In fact, there are several organisations who now have the CIPS Ethics Kite Mark where all of their team have, specifically on that subject, been trained in ethics. The organisation can demonstrate that people within their team, as long as they procure anything, they have a full knowledge of what the subject is. Now, if you look at some statistics, and in terms of the effect on procurement, I think procurement fraud is like taking up 20% of the cost of doing business in developing countries, and 10% of the cost of doing procurement anywhere else. So, I guess for those areas of those countries who can ill afford it, that becomes a really, really important topic to address because it directly affects their affordability to invest in infrastructure and other areas, as it’s adding to the cost of doing business.

Technology is driving a lot of the procurement transformation stories at the moment and obviously MENA has had sort of issues such as the uptake of technology in the past and concepts such as cashless banking, plus they’ve had cyber security weaknesses. What kind of challenges have you seen there with regards to the technological side of it?

People have access to the latest technology, and people do have access to, and are able to purchase, the best solution they can afford. So, if there is an issue that it’s sometimes a case of people over specifying what they want. So, an organisation may have acquired the latest ERP or eSourcing suite, or solution, that is applicable to their operations, and to a certain extent, other organisations have seen that and said, “Okay, well, we’ll have that as well,” without aligning it directly to what they need.

So, there has been, to a certain extent, some over specification, which procurement transformations are now addressing. There are an awful lot of procurement transformation going on, where organisations are actually really looking at what they’ve done over the last 18 months and sizing or repointing how technology is adding value.

So, you have people looking at developing marketplaces, where they haven’t thought about it before. A lot of organisations are creating their own marketplaces where everyone could be a buyer, rather than continue to centralise procurement across the procurement team. So, they are making use of those cloud-based systems and those marketplaces enabled by some of the technological solutions out there.

Do you see blockchain playing a bigger part in procurement transformation?

There’s a lot going on around blockchain at the moment. We have the UAE government, for example, who have said that they will become the first blockchain government by 2020. And there are several practical examples of how blockchain is used around scanning trans-shipments etc. There are many other examples from around the world and the region. I think the reality is that blockchain is not yet an end-to-end solution. I think when it is, then you’ll see the benefits of the really embedded end-to-end blockchain solutions where people either have an in-house blockchain or a localised blockchain across groups of businesses; a corporate blockchain.

I think that’s where regions like the Middle East will come to the fore, because they are perfectly positioned to be leaders in the adoption of this technology. Because they don’t have a lot of legacy systems and practices to hinder their adoption of new technologies. They also have very strong advocacy at government level. If the UAE government, for example, says that they will become the first blockchain government by 2020. Well, that means that everyone’s going to have to participate in that transformation. Because if the government will make that a priority, then certainly everyone else does it. So, there’s a great opportunity for wide scale adoption of blockchain technology, when end-to-end solutions are implemented. Companies out here are very, very open to the technological changes.

More than three quarters (81%) of B2B organisations are witnessing a decrease in profits due to online order errors, causing…

More than three quarters (81%) of B2B organisations are witnessing a decrease in profits due to online order errors, causing significant repercussions on wider business growth, according to new research out today. 84% of businesses have witnessed a decrease in efficiency due to order errors, while 81% saw a drop in productivity and a further 81% saw a decrease in profitability. The survey of 560 global B2B buying professionals found that 44% of organisations have witnessed a decrease of more than 11% in sales, productivity, efficiency or profitability due to errors during the purchasing process. Some are seeing a decrease in excess of 25%.

The majority of B2B buyers place orders weekly, often daily, which means the opportunity for errors to occur is high. 44% of individuals experience errors with online orders at least once a fortnight, while a fifth encounter issues weekly and 9% experience issues on a daily basis. With the majority of B2B buyers preferring to buy online (75%) it’s critical that e-commerce platforms can reflect current and accurate sales information, such as pricing, shipping and stock as a way to help reduce errors.

The research found that user entry was the top reason for problems occurring during the online buying process. 28% however, felt that incorrect product information is causing errors while 28% said it was incorrect purchase entry. Other reasons for errors include incorrect inventory display (27%), incorrect shipping information (25%) and incorrect pricing information (23%).

Online order errors appear to be most frequent in Benelux with 55% of buyers experiencing problems at least once a fortnight and 25% on a weekly basis. 48% of businesses based in Germany, Austria and Switzerland also experience errors once a fortnight and nearly half (46%) of British or Irish businesses face the same problem. Yet order errors in the US and Canada appears to be less frequent, with the majority (51%) witnessing order errors at least monthly.

B2B buyers purchasing automotive parts appear to be the most susceptible to errors when making purchases online, as 54% experience problems at least once a fortnight. This is closely followed by those purchasing building materials (53%) and food & beverage products (52%).

Michiel Schipperus, CEO and Managing Partner at Sana Commerce comments: “B2B organisations have embraced e-commerce as a route to market and as a way to remain competitive and reach new markets. But our research highlights the need for e-commerce platforms to deliver accuracy across all buying channels. Ensuring that the e-commerce system is integrated into the organisation’s ERP platform to provide a single source of truth at the point of purchase goes a long way to ensuring that customers have the correct information needed to make an informed purchase decision and reduce order errors.”  

The survey of B2B organisations in Europe and the US was undertaken by independent market research company Sapio on behalf on Sana Commerce. The survey sample covered food and beverage, electronics, building materials, medical supplies and automotive parts. For more insights download the report here.

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

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

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

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

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

We hope you enjoy the issue!

Global procurement market intelligence firm SpendEdge has released its Global E-Commerce Logistics Category of its Procurement Market Intelligence Report. According…

Global procurement market intelligence firm SpendEdge has released its Global E-Commerce Logistics Category of its Procurement Market Intelligence Report.

According to SpendEdge, “the growing popularity of the e-commerce industry has spurred the rise in intra-regional and cross-border trade which is supported by the prevalence of favourable e-commerce trade policies across the globe”.

The improving purchasing power is, according to the report, giving freedom to the working-age population to exhibit a significant incremental spend on e-commerce websites, which consequently, is accelerating spend momentum of the e-commerce logistics market. 

This e-commerce logistics market intelligence report offers a comprehensive analysis of the primary cost drivers and its subsequent impact on the overall pricing. Current supply market forecasts and the spend opportunities for the suppliers are also outlined and the category spend is analysed from the perspective of both buyers and the suppliers.

SpendEdge procurement expert Anil Seth said: “Buyer’s service requirements vary based on their geographic location. This makes it essential for them to select suppliers based on their capability to provide customised services.”

Read the Free Sample Copy of this e-commerce logistics procurement research report here!

Every business needs to remain on top of its supplier relationships but, of course, there is more to procurement than…

Every business needs to remain on top of its supplier relationships but, of course, there is more to procurement than making a few back-of-the-envelope calculations about which materials and services are needed. All manner of concerns can come into play: cost – but also regulator compliance, forward planning and more.

Clearly this is an area where IT systems can play a role, smoothing out what can be a notoriously laborious process. And yet business-to-business purchasing as a whole lags well behind business-to-consumer when it comes to volume. Only 13 percent of business-to-business sales are being conducted online.

So, is procurement a cold house for IT? Or is it that further investment is required? Or are some kinds of suppliers simply easier to deal with face-to-face? After all, buying professional services is quite different from buying a thousand ballpoint pens.

Being digital

Peter Wetherill, senior technology manager at procurement specialists Efficio Consulting, says that as companies go digital it is natural that processes such as procurement come under scrutiny.

“We published a study recently, looking at the future of procurement; looking at whether or not digitalisation is the future. Everyone is [being] pushed to have a digital strategy these days, so we try to turn it into something actionable.”

The objective should be to make things more efficient, he says.

“If you look at things like strategic sourcing, spend analysis and running a sourcing event—those are very ‘processised’ things. We’ve run that as a structure thing for 18 years ourselves [and] we’re building technology now that adds automation to it. It’s repeatable.”

Where the real value is added, though, is not merely in the technology, says Wetherill. Instead, it is in intelligence.

“There are a number of assets you create during the process that are useful the next time. Instead of reinventing the wheel, you use the same things, albeit modified. Technology really lends itself to the strategic part of procurement. Time and time again I’ve sat with clients who have brand new installations, but it has nothing in it and [so] they’re only using ten to fifteen percent of its capability. They’re not getting the business use case out of it.”

In effect, then the question becomes no longer one of either procurement or IT per se, but about how to implement a process that makes use of the intelligence in a business.

“Are various KPIs being hit? Am I paying the right price? It’s part people, part machine, but we’ve built something that rather than trying to map invoices to the project, has a workflow that does all these things properly; it has the rate card in it, it has all the data [and] you can run a large programme through this and show the [for example] five percent where there is non-compliance.

“The technology is not there to remove the human element, it’s there to help make more data-driven decisions,” he says.

Computer says no

Allyson Stewart-Allen, chief executive of International Marketing Partners, says that she has doubts about deepening the intrusion of IT into procurement—at least when it comes to some types of purchasing.

“I think it’s affecting the bidders significantly because they aren’t always clear what the criteria are. They may be bidding for the provision of professional services and, traditionally, those require a relationship of some kind: interaction with the client and the buyers,” she says.

Stewart-Allen says that the challenge of e-bidding is that you do not get to easily convey the values of your business.

“It’s even more difficult with professional services, as you’re buying the people, buying their judgement, and not a product.

“My frustration and challenge is that I don’t get to readily communicate, other than in print, what my sources of differentiation are. They can read my background on the website, but that’s not the same as putting trust in the person’s judgement and the ability to contextualise,” she says.

Nonetheless, IT systems are here to stay, including machine learning (ML) and artificial intelligence (AI) that reduces administration and opportunity for human error.

Procuring IT

One area where it is natural for IT systems to take a lead in procurement is in the procurement of IT itself. This has changed radically as the culture of IT departments has changed—not least as IT now typically has increased board-level representation and it is expected to make a strategic contribution to business objectives.

“It’s an interesting time,” says Charles Blair, a senior management consultant for technology at Efficio.

CIO agendas have changed. They used to be about building IT; pulling all the widgets together and keeping the lights on. Nowadays, with the maturity and commodification of all of these services, you can buy then all in in the form of managed services. CIOs [now] have a much more greater focus on cost,” he says.

However, IT departments, historically, have not has the skillsets needed for procurement, he says.

“IT teams don’t typically have negotiation skills. Procurement as well, they’re not technology guys.

“There was [previously] a bit of a ‘project culture’, and procurement wasn’t involved until the end of the process. Procurement ended up with a really bad name. Likewise, some people in procurement don’t understand IT and challenged on the wrong things, [while], on the other side, IT would be approaching suppliers in the wrong way and eroding any levers procurement might have,” he says.

Nonetheless, despite the trend toward cloud computing and external service provision, there is greater need for procurement in IT rather than less. True, fewer servers and switches are being bought, but those were always easier to buy than services.

“Cost in technology is on the increase as software is invested in instead of people, and also with the trend for using suppliers,” says Blair.

“There’s no reason for most companies to have their own service desk. It’s much cheaper and more efficient to get a service provider who does it all the time to run it. [But] Services like that need to be obtained in accordance with service level agreements (SLAs) and (key performance indicators (KPIs),” he says.

So, in fact, the stakes are higher than ever—and they are also not on-off.

“Procurement is not only about sourcing the solution, but also about managing it,” says Blair.

Whether for IT services or any other kind one contractor relationship, procurement teams must, says Allyson Stewart-Allen, make it clear to the business that any IT used should be there to support the decision-making process, not replace it.

“The issue that the procurement folks have that they don’t push back. There’s a difference between buying professional services versus buying pens,” she says.

In the end, for Stewart-Allen, humans may be aided by machines, but letting the machines replace them is a false economy.

“They’re seeking efficiency, but end-up making bad decisions,” she says.

“Maybe they could make better decisions if they applied different processes to services vs goods. I think that the challenge is the one-size-fits-all mentality. There is often bind faith put in technology and what it’s going to do for you, versus the reality. It’s not a great idea when you’re buying people,” she says.