Last week, I had the opportunity to facilitate a webinar last week with procurement consulting firm Efficio, titled Driving Greater Procurement Performance from Complex Direct Spend and Factory Indirects. In the webinar, I was joined by two of their US-based principal consultants, Arthur Mattouch and Waldo Saville.
During the webinar, Arthur and Waldo shared three case studies demonstrating the strategies and tactics that can be used to deliver sustainable savings in a mid-cap manufacturing environment. In today’s podcast, I am sharing this case study, along with a couple of questions that I asked during the webinar.
This is a company looking to quickly reduce costs through a coordinated cost reduction program, while minimizing disruption on the business. As you will hear, they ended up switching suppliers for only 12% of the total number of parts.
To watch the entire webinar on-demand, including the supporting presentation, you can register here.
What do childcare, ducks, and power have to do with negotiations? In today’s episode, host Philip Ideson shares three negotiation tips taken from his experience as a procurement practitioner and entrepreneur.
As we enter the summer, I’m going to spend some time answering some of your most frequently asked questions. These pod’s are going to be bite-sized, so I’d love to hear your feedback on whether you like the shorter podcasts or not.
One of the topics that I get asked the most about is negotiations. So for the next couple of weeks, I’m going to share some insights based on my own experience.
This week, I’m going to dig into the archive and share a part of a podcast I recorded 3 years ago - specifically with regards to the question of how to maintain supplier relationships after a tough incumbent negotiation. It is a topic that I have a lot of experience of - both from the practitioner and service provider sides of the table!
If procurement is going to attract the ‘best of the best’ to join our ranks, no matter what their background, then at some point we can expect to work alongside someone with no experience in procurement. Whether such a move is successful is likely to be dependent on the individual transferring in as well as the overall culture of the organization.
I interviewed Liam Moniz, Manager of Procurement Systems & Services at Fortescue Metals Group, during SAPAriba LIVE in Austin, Texas. Two years ago, Liam had no experience in procurement, and, as he told me, “didn't know a purchase order from a purchase requisition or invoice”. Based upon his success in other roles, the business brought him into procurement to be a fresh set of eyes as they invested in process, technology and talent transformation.
His background in IT Service Delivery and Support prepared him for the technology-focused parts of transformation, but process and customer satisfaction were another matter. To address those, Liam leaned on his understanding of business objectives and his desire to engage with stakeholders in pursuit of value – including through the implementation of guided buying.
Whether you are a consultant or a practitioner, it seems like the grass is always greener on the other side. Consultants are constantly on the road, work late hours and are subject to high expectations from their management team and the point people on each customer account. Practitioners find themselves at the mercy of consulting teams they didn’t personally decide to hire, lack the influence naturally extended to external parties and are often left to deal with the details – and the devil in them – once the consultants have flown off to their next engagement.
I’m joined today by Mark Richardson, Head of Procurement, Fleet & Administrative Services at AAA Southern California. He is uniquely qualified to discuss the differences between procurement consultants and practitioners because he’s been both.
Having joined AAA initially as an individual contributor, he now manages the team who were initially his peers.
In this podcast, Mark addresses the challenges of making the transition from consultant to practitioner and making the transition from peer to leader.
Today I am joined on the show by my good friend, procurement executive recruiter Iain McKenna. Iain is Founder and Managing Director of the executive search firm Sourcing Solved.
Our conversation is split into a couple of different parts:
In the first half of our interview, we discuss the hiring process, and specifically if our reliance on AI - such as keyword searching on CV’s and resumes - severely restrict an organizations ability to hire the best candidate for a role. Iain shares tips on how procurement leaders can hire for personality, drive, EQ and an empathetic management style rather than those with the best keyword match.
In the second part of the interview we switch focus and specifically discuss hiring in the context of procurement services and software firms. A number of firms are aggressively hiring in this space, and yet their initial brief tends to focus on hiring from competitors rather than from industry. We discuss how, as a practitioner, you can best position yourself for a move into consulting or to a procurement software firm - and the benefits for software and consulting firms in hiring practitioners.
Many procurement organizations pay lip service to innovation, but few are taking the steps required to make it a reality. Part of this has to do with the difficulty overcoming the paralysis of the unknown and part of it has to do with a willingness on procurement’s part to risk failure. Ironically, facing the unknown and pushing past the fear of failure makes it far more likely that disruptive innovation will be achieved.
I’m joined today by Cyril Pourrat, Chief Procurement Officer at Sprint. They are three years into their transformation journey, one that has a new purpose in the context of Sprint’s pending merger with T-Mobile. If the merger goes ahead, procurement will be expected to drive significant synergy-based savings. If it does not, achieving cost savings will become even more critical for Sprint to thrive as a stand-alone company.
In preparation, Cyril and his team have launched a number of innovative programs. One of them is ‘Procurement Digital Labs’ – an initiative that is empowering a multi-generational team to identify and experiment with a broad range of technologies. The objective is to provide buyers with far deeper insights use in the development of their sourcing and category strategies. Another is enabling the use of predictive analytics in negotiations.
In this podcast, Cyril talks about:
If you’ve been in the workplace – any kind of workplace at all – for longer than six months, chances are good you’ve experienced poor management at least once. Sadly, being in the workplace for years or even decades doesn’t come with the same odds of encountering even one great manager. Why is that? Why are great managers so rare?
I’m joined today by David Deacon, career HR executive and the author of The Self Determined Manager: A Manifesto for Exceptional People Managers. He and I talked about the complex effort we call management, or as David defines it, “a hugely important, impactful role that most people don’t do very well.”
The main challenge is that most poor managers don’t want to be bad managers; they’ve just never experienced a good manager. And without a proper role model, it can be very hard – although not impossible – for an individual contributor to scale themselves and their impact by effectively leading a team of people towards a single, unifying goal.
According to David, great managers start by truly knowing themselves. They are as clear about their mission, vision and purpose as they are objective about their personal strengths and weaknesses. Great management requires the creation of an environment where the team can thrive, and it is usually supported by a natural sense of empathy that inspires each member of the team to do a little better than they thought was possible every single day.
Whether we are responsible for Procurement and our stakeholder is the c-suite, or we are developing a Category Strategy and our stakeholders are the business users. Alignment continues to be one of the greatest challenges for procurement. Ultimately, it becomes the differentiator that determines whether you are perceived as being a trusted advisor or a back office function.
Indeed, it is not possible to become a mature procurement organization without true strategic alignment, at scale. How can that alignment be sustainable, and not contingent only upon a team member’s personal relationship and rapport with an individual stakeholder, or group of stakeholders?
There is one tactic that consistently works. In today’s show, I will explore why treating your senior level stakeholders as investors in the company of “procurement” is key to building alignment - and I’ll share how you can get started!
I’m joined today by Anthony Clervi, President and CEO of UNA, a group purchasing organization (or GPO). He joined us last month for an AoP Live session that proposed an alternative approach to ‘automating’ procurement – one that doesn’t involve robots and doesn’t cost a dime.
As the opening quote suggests, our preconceived notions can often prevent us from leveraging the full range of options available to us. Acting without being fully informed can be a huge misstep for procurement, given that our purpose is to identify and compare as many qualified solutions as possible for every business need.
Since many procurement organizations do not have experience with a group purchasing organization, everything we learned about what GPOs are NOT is just as valuable as what they do and the opportunity they represent. GPOs are NOT:
- Just for small companies
- Just for hospitality, healthcare, and higher education
- Just about savings
- Just for indirect spend
- And most importantly, GPOs do not represent a competitive threat to in house procurement.
The only guarantee that comes with a transformation journey is that there will be ‘twists and turns’ along the way. And since no organization can escape the unexpected, how procurement leaders makers handle those twists and turns becomes a critical differentiator and success factor.
While I was at ProcureCon Indirect East, I interviewed Dave Quillin, Manager of Procurement at Alliant Credit Union in Chicago. I last interviewed Dave in early 2017, when he was at the end of his first year of procurement transformation. This conversation gave us an opportunity to get caught up on the progress his team and organization have made over the last two years and hear about what he has discovered along the way.
The Alliant procurement organization is small, which forces them to prioritize strategically, leverage every resource available to them, and distribute some of the activities that would be centralized in a larger company. But does that make them completely different from big procurement organizations? Absolutely not, says Quillin. As he points out, even a 50 or 100 person procurement team will eventually tap out on resources or be asked to act on category expertise they do not possess.
Perhaps his greatest lesson learned of all from his transformation journey to date is that those ‘twists and turns’ are the status quo. Adjusting to them, and designing every process with flexibility in mind, even governance and compliance, will likely make all the difference in the journey forward from this point.
In this conversation, Dave Quillin discusses:
• How small procurement teams can build (or access) specific category expertise
• The talent requirements, particularly in the area of soft skills, that are absolutely mandatory in a smaller organization, and why Dave sees that as an advantage
• Why implementing all P2P modules at once – even in response to stakeholder demand – may not be the best approach.
• A key piece of management advice from a former colleague that has made all the difference on the Alliant Credit Union transformation journey.
Everything procurement delivers – from savings to risk mitigation to value – is predicated on having access to clean, trustworthy data. If this foundation does not exist or if it is shaky, then buyers don’t know how much the company is spending with a given supplier, let alone how they can improve the efficiency or impact of a given spend category.
While I was at the Ivalua NOW event in Paris, I interviewed Cyrille Naux, Purchasing and Supply Chain Vice-President at Chassis Brakes International, a multinational manufacturer of automotive brakes and brake components. He gave a keynote presentation about his company’s procurement and supply chain transformation journey – one that is still underway.
Unlike industries such as retail and professional services, which start by managing indirect spend and then gradually transition to influence directs, most procurement teams in the automotive space take a direct-spend first approach. Direct spend suppliers are large, global, and absolutely critical to the company’s operations and their competitive advantage. Strong executive mandates bring the management of direct spend within easier reach for procurement than ‘messy’, non-transparent indirect spend.
For Chassis Brakes, the first step to manage their spend was supplier consolidation: reducing direct spend suppliers from 12,000 to 6,000 (with an eventual goal of 2,000) and indirect spend suppliers from 10,000 to 4,000. They have also taken a hardline approach to supplier master data cleansing and standardization which led to a high quality supplier database they continue to work hard to maintain.
When procurement talks about transformation, we are usually referring to the critical changes we need to make to our own talent, processes and technology. But does the opportunity exist for procurement to transform the business as a whole? Evidence from the team at VSP Global suggests that it does.
I interviewed two members of the VSP Global team, Nathan Haydn-Myer, Manager of Procurement Operations and Insights, and Siddharth Ramesh, Manager of Corporate Procurement about their dynamic program to centralize procurement and maximize savings, Spend it Like it’s Yours (SILIY) with the help of “Moolah” the home-grown procurement mascot.
As they were quick to admit, procurement can’t promise to be everything to everyone, but that isn’t a reason not to have broad, open-ended conversations with internal stakeholders. In fact, the same collaborative approach that led to the creation of Moolah (a silly - or siliy – character with a serious message) also made it possible for procurement to help the VSP sales team respond to RFPs.
While VSP has received industry-wide attention and acclaim for their approach to centralizing procurement, it wasn’t an easy journey. They were tasked with centralizing procurement and driving savings WITHOUT a mandate. The journey also took longer than outsiders might expect, requiring several years to execute and leading to some amount of natural but healthy turnover.
It is impossible to have a forward-looking discussion about procurement without digital transformation and automation coming up. That said, figuring out what their inclusion means on a company-by-company basis will differ drastically – creating a unique challenge for every CPO who decides to lead their organization on a digital journey.
I’m joined today by Kris Koneru, the Business Practice Head of Sourcing & Procurement at Infosys BPO. He was in the ‘hot seat’ for a dynamic AoP Live session in early April about all of the considerations beyond technology that organizations need to be prepared for before committing to transformation.
Since AoP Live sessions are driven by audience questions and comments – some submitted in advance and some submitted during the session – we never know quite where the focus will be on a given topic. For this AoP Live there was no question what procurement professionals felt the need to learn more about: they wanted to know how digital transformation will affect their performance objectives and metrics. Far more questions were submitted on this topic than any other.
Kris also discussed how digital transformation can be incorporated in broad change management initiatives, what impact it is likely to have on procurement’s internal and external relationships, and how talent management and leadership development priorities will need to shift to maximize a digital-first environment.
Saying that someone has or embodies the ‘spirit of entrepreneurship’ implies a lot of different drives and qualities. There is the willingness to take calculated risks, the need for self-accountability, contagious levels of energy and creativity, and a true understanding of the top to bottom impact of business decisions. Procurement can absolutely benefit from professionals with an entrepreneurial background – the question is how we can add them to our ranks.
I interviewed Jill Robbins, Senior Director of Global Procurement - Indirect Goods & Services for Elanco, a global animal health company. She is the perfect example of both an entrepreneurial spirit and a non-linear career path. In addition to working in procurement, she is the author of a children’s book, co-owns a small business with her husband, and has worked as a consultant.
Empowering procurement to make the maximum contribution to the business requires a combination of analytical and broader business skills. Starting with a solid foundation in data, the most valuable professionals add to their experience over time without worrying whether they are following the fastest route to the top, but rather doing the most important, and the most interesting, work.
In this conversation, Jill shares her perspective on:
• The importance of finding a mentor that you connect with, regardless of the company they work for, the function they work in or their gender.
• Whether certifications really matter, either in career investment or in hiring/recruiting.
• The time and place for rules and norms, and when decision makers should push boundaries for the sake of creating an advantage.
When you get right down to it, innovation is just solving a business need in an entirely new way. In order to do that, however, you and your team have to really understand the business and its customers. The most strategic suppliers – usually a select few – play an important role in the process of innovation, which creates an opportunity for procurement to guide their technical value potential to the point where it delivers operational results.
While I was at ProcureCon Indirect East, I interviewed Lawrence Kane, SIG Sourcing Supernova Hall of Famer and Senior Leader of Strategic Sourcing Functional Excellence and First Time Quality for a Fortune 50 company. In addition to NOT being the Zodiac Killer, he has spent over three decades innovating in various ways and keeping his perspective and deliverables in alignment with enterprise needs.
You may also remember Lawrence from his last Art of Procurement podcast (Episode 164, published in December 2017), where we discussed the active power of empathy – both in supplier negotiations and in internal relationship management.
In this conversation, Lawrence discusses:
• The critical role of governance and contracts (believe it or not) in innovation.
• The importance of making sure everyone in an organization – including the newest, lowest paid members – are motivated to contribute to brand value, especially when they have external contact.
• The tenuous balance between savings and innovation, and how procurement needs to invest in one without sacrificing the other.
Everyone wants to be seen as an innovator, and procurement leaders are no exception. The problem with this desire is that, much like procurement transformation, the definition of innovation can be hard to pin down. We all know it when we see it, but setting out in the morning with “innovation” at the top of your to-do list can be paralyzing… unless you have a master plan.
I interviewed Nancy Nicoll, Vice President of Not for Resale (NFR) / Indirect Strategic Sourcing, at ProcureCon Indirect East about everything from reporting to the C-suite to managing procurement through a huge corporate merger.
Although savings continues to be a high priority in the razor-thin margin grocery retail environment, they are not the horizon of procurement’s focus. For Nancy and the rest of her team, savings are the foundation – what gets them through the door and establishes their credibility – so that procurement can go on to deliver exceptional, sustained, big picture value.
When we hear about ‘fintech’ providers, most of us immediately think of a quickly shifting ad diverse landscape of startups – highly innovative companies, some of which are here today and gone tomorrow. If partnering with a fintech is even on your company’s radar screen, how can procurement develop a reasonable strategy for such an unpredictable industry?
I’m joined today by Andy Atkins, a professional commercial contract manager with a decade of experience negotiating and drafting complex financial, information technology and telecommunication agreements. He is an IACCM Certified Contract and Commercial Manager as well as a Certified Professional in Supply Management and Certified Professional in Supplier Diversity by the Institute for Supply Management (ISM). His broad array of industry experience has empowered him to become a subject matter expert in supplier management, including intricate multi-million-dollar transactional agreements.
Andy recently authored an article for IACCM’s Contracting Excellence Journal titled, ‘The ‘FinTech Five’ – Mitigate Risk by Focusing on Five Clauses’ (see link below). It caught the attention of the AoP team, and we brought him on the podcast to discuss the fintech industry (and more) for a broader procurement audience.
In this conversation, Andy covers points such as:
• What is fintech (or financial technology), and how mature are the providers in the market?
• How to perform due diligence on startups, regardless of the product or service they provide.
• What are the differences between procurement in highly regulated industries such as financial services and pharmaceuticals and managing spend in less regulated industries?
• The importance of understanding your customers’ perspective – no matter what industry they are in.
• How procurement can be seen as a value-add rather than an internal roadblock by earning the trust of stakeholders and decision makers.
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Today’s discussion does not condone nor condemn the investment, business relationship, acquisition or trading of any equity directly related to a financial technology company or entity. This podcast discussion is strictly for educational purposes and is not for legal or financial advice. The opinions represented here do not necessarily reflect those of Andy’s current or previous employers and Andy is speaking today on his own behalf without further representation.
In this episode, AOP Host Philip Ideson and Kelly Barner (AOP Content Director and Owner of Buyers Meeting Point) discuss their major take-aways from March’s news, industry topics and podcast interviews.
In March, Louis Bastone (Indirect Category Manager at ASML) talked about making the move into procurement from another function or later in one’s professional career. Sammeli Sammalkorpi (co-founder of Sievo) provided some grounded advice about AI, making clear that if we want it to generate real results, we have to apply it wisely. Finally, David Loseby (author, Soft Skills for Hard Business) reminded us that as long as people are still at the heart of business, we need to be aware of our choice of language, their perspective on decisions, and the impact of small decisions compounded over time.
Don’t miss out on upcoming opportunities to connect with us in person at ProcureCon, Ivalua NOW, Ariba Live and the upcoming SIG Summit. We also have two AOP Live sessions scheduled in April, one with Kris Koneru at Infosys and one with Anthony Clervi at UNA. Make sure you are subscribed to our mailing list to receive notice once those events are open for registration.
This month’s discussion topic comes from a Harvard Business Review Article: ‘Digital Transformation is Not About Technology’. It reminds us that our technology may have changed, but implementation and adoption challenges remain the same – especially for organizations that are trying to significantly change and improve their operational capabilities.
In a era when we emphasize the importance of ‘soft skills’ in the face of the hardest business challenges, the human element is impossible to ignore. While most of us tend to focus on developing our own interpersonal skills (or the absence of desired interpersonal skills in others), an equally important element is behavior. What are people doing and why? If we can understand behavior, we are in a far better position to deliver results and build sustainable relationships.
I’m joined today by David Loseby, FAPM, FCMI, FCIPS Chartered, FRSA - CPO of Aquitaine Strategy Limited, Global Board of Trustees Member of CIPS, advisor and author of ‘Soft Skills for Hard Business’ (2018). He has spent 25 years at the senior executive/director level driving value and change through procurement, organizational transformation and change management in the public and private sectors.
As David explains, the importance of remembering what while we all expect others to exhibit ‘rational’ behaviors, rationality is in the eye of the beholder. In cases where we think others are acting against their or the enterprise’s best interests, it is likely that we either do not have access to the same information they do, or that they are interpreting that information differently than we are. Getting to the root of that disconnect is the most effective way to address unexpected behaviors and achieve alignment.
Automation can only be as good as we program it to be. If we want innovative, industry-leading support from emerging technologies, we need to be informed about the potential applications of AI and machine learning.
I’m joined today by Sammeli Sammalkorpi, Co-founder of Sievo, in a discussion that was driven by the engaged audience that joined us for February’s AOP Live session. We gathered questions in advance and fielded spontaneous ones during the event rather than wading through a conventional slide-driven talk on AI use cases.
One topic everyone kept coming back to was how to know when you are ready for an investment in AI and whether procurement is a good use case.
According to Sammeli, there are an increasing number of examples of how AI and machine learning add value in procurement. They include spend classification, capturing supplier information from public sources, and parsing the key terms from lengthy, complex contract documents. Automation can be implemented as a pilot project or an enterprise-wide effort, and it can improve legacy processes as well as parts of the business that have been deliberately re-worked to leverage the unique advantages of AI.
We often discuss the impact that procurement talent has on current results and the role it will play in determining how our function evolves in the future. The procurement community is vibrant, diverse and defined, but we need to remember that some of our best future team members are currently either in college or working in other functions. How we represent ourselves to them will determine how soon and how willingly they join our ranks.
I’m joined today by Louis Bastone, Indirect Category Manager for ASMC, a manufacturer of chip-making machines in the semiconductor industry. 9 out of 10 times when you ask someone how they ended up in procurement, their answer involves some an unexpected career twist. Not Louis. He took procurement courses in college while pursuing a degree in Integrated Supply Chain Management.
In this interview, Louis shares the role that creativity, enthusiasm and influence have on performance and job satisfaction as well as our elevation from tactical to strategic work. He also provides interesting insight into the entrepreneurial appeal of working in procurement and how newcomers can balance an affinity for their adopted function while not losing the critical edge of a broad, cross-functional point of view.
As Louis explains, we’re all on a journey. How far we get is mostly a matter of perspective. His advice is to focus on the professional experiences you want to have rather than the title you’re hoping to get.
In this episode, AOP Host Philip Ideson and Kelly Barner (AOP Content Director and Owner of Buyers Meeting Point) discuss their major take-aways from February’s news, industry topics and podcast interviews.
In February, Andrew Daley (Edbury Daley) described the importance of conquering risk aversion when we scope out and fill open positions. Jens Hentschel (FIVIS Partnership) reminded us of the danger of “toiling away” at a tactical level while missing the big picture. Finally, Matt Clark (Corcentric) described the positioning challenges being faced by accounts payable organizations as well as the company’s recent acquisitions: Source One Management Services and Determine.
Don’t miss out on upcoming opportunities to connect with us in person at ProcureCon and Ariba Live, or the latest on the AOP Live schedule – including the free download on Building a Procurement AI Game Plan based on February’s session with Sievo.
This month’s discussion topic was driven by the findings of The Hackett Group’s 2019 CPO Agenda Report: Building Next-Generation Capabilities. The existing gaps between what procurement believes is important from a skills development perspective and what the enterprise values (and why) may be a quick read, but it deserves a lot of thought.
The Accounts Payable team play a key role in the success of procurement.
The data that they extract from supplier invoices determines the accuracy of our spend analytics (and therefore our strategic insights) and the capture of the cost savings we claim (and thus procurement's ROI).
Today's guest on the show is Matt Clark, President and COO of Corcentric. Corcentric's research shows that, despite the importance of Procurement and Accounts Payable alignment, the vast majority of groups still operate in silo's. And this is costing a typical company up to 60% in savings leakage.
In today's conversation, I seek to better understand what keeps an AP Leader up at night, and how a procurement leader can translate this understanding a more collaborative relationship that elevates the impact of both groups.
We recorded our discussion just a couple of days after Corcentric entered into an agreement to purchase procurement SaaS provider Determine. In our interview, I also ask Matt to share details behind Corcentric's strategy to continue to grow their end-to-end procurement capabilities.
Recruiting and strategic sourcing actually have a lot in common – even beyond the role that risk appetites play in decision making. In both cases, the sooner you get a specialist or expert involved, the better stated your requirements will be, and the better the outcomes you can achieve. It can also be hard to break free from historical approaches to meeting needs, whether that means escaping the pull of an incumbent supplier or looking beyond a traditional candidate profile.
I’m joined today by Andrew Daley, a founding Director, and leader of the procurement practice at Edbury Daley, a recruiting company specializing in the spend management, spend analytics, payments and supply chain finance markets. Andrew has shared his talent and recruiting insights with us in several AOP pods, including Episode 8, The Strategies & Tactics You Need to Secure Your Dream Job in 2016, and Episode 76, The Rules of (Procurement) Attraction.
In this interview, we discuss how the risk-averse nature of hiring managers is limiting the potential impact of procurement organizations and why our role definition and hiring processes need to be rethought.