Diversification through procurement w w w .c 23 •
postr
ategy
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Reconsidering value for a sustainable future — R enee Leong, CPO, ENGIE North America E xe cut ive In si g hts
I s sue
Revolution. Not just transformation
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Welcome to issue 23 of CPOstrategy Procurement transformation is very often the name of the game in the pages of CPOstrategy, but what happens when that transformation acts as more of an enabler towards greater sustainability in the supply chain? What does sustainability really mean to an organisation and how can procurement accelerate the conversation? Well, Renee Leong, CPO of Engie NA. says it’s a question of how we actually measure the value of procurement that’s important before looking at how it can help a company significantly improve its impact on the environment around it. We caught up with Renee as she discussed procurement and the company’s ongoing move away from fossil fuels. “We have the power to actually influence how the product is being made and how the services are being offered to us so we can really help drive positive change to society,” she says.
EDITOR IN CHIEF Andrew Woods
EDITOR Dale Benton
MARKETING MANAGER Tracey Harris
CONTRIBUTING EDITOR Nell Walker Kevin Davies
GRAPHIC DESIGNER Dhruti Vithani
CREATIVE LEAD Mitchell Park
VP GLOBAL FINTECH & INSURTECH Alex Page
We also caught up with Mahmoud Al Alawi, HCT Director of Procurement & Contracts, two years after launching a significant procurement transformation to see how the organisation continues to take procurement to new heights even during the challenging COVID19 pandemic. And finally, we speak with Douglas Klimak, CPO of Banco Bradesco, as he walks us through a procurement journey that will see an institute of Brazillian banking define a new age of procurement maturity.
Dale Benton, Editor content@b2e-media.com
VP TECHNOLOGY Andy Lloyd Craig Daniels
VP PROCUREMENT Heykel Ouni Greg Churchill Richard Deane
PRESIDENT & CEO Kiron Chavda
Contents
26
A quick look at… JAGGAER’s Digital Mind
6
Procurement and a sustainable future
38
Diversification through procurement
56
92
Procurement transformation in times of uncertainty
Five KPIs for every procurement professional to consider
74
Procurement revolution
104 The next phase of the event industry
www.cpostrategy.com
5
Re co n si der ing value: p rocurement a n d a s u sta i n a b l e f u t u re
Reconsidering value Procurement and a sustainable future Renee Leong, CPO, ENGIE North America, explores how procurement is the key to defining a future away from fossil fuels...
Written by
Dale Benton
Produced by
Richard Deane
www.cpostrategy.com
7
hen discussing
successful model,” says Renee Leong, Chief Procurement Officer, ENGIE North
procure-
America. “There is scope there for a model
ment trans-
that can be copied, leveraged and utilized
formation or exploring
across all the industry and companies. But I think we have a long way to go.”
the concept of a best-in-class procure-
The question then becomes one of
ment function, a consistent and widely
change. More specifically, changing the
accepted truth is there is no ‘one size
way we measure procurement, especially
fits all’ approach to defining and operat-
for an organization like ENGIE North
ing a procurement function or a procure-
America, proudly part of the ENGIE
ment model.
company, a global leader in low carbon
Each organization has its own unique
energy and services with €55 Bn revenue
complexities within its procurement and
globally. The company provides capabil-
supply chain functions which makes it all
ities and solutions in the United States
but impossible to simply lift a successful
and Canada to help customers decar-
operating model and drop it into a different
bonize, decentralize and digitalize their
organization in an entirely different indus-
operations and run their facilities more
try. But, while that may be true, the contin-
efficiently and optimize energy through
ued evolution of procurement and indeed
clean power generation, energy stor-
the way it is being perceived (and invested
age, and retail energy supply. As such,
in) has created an incredibly exciting time
the focus of procurement (and how it is
for the procurement function and for
measured) takes on a whole new dimen-
procurement professionals. Opportunity is
sion when compared to some other
well and truly knocking for procurement.
procurement functions.
“As much as procurement has become
Where once, procurement was simply
far more strategic in nature, with some
a cost saving operation, it has tran-
incredible strides being made in the func-
scended this somewhat narrow defini-
tion all over the world, I think if we were
tion. While cost saving is and will always
to ask: what is the perfect procurement
be a crucial part of procurement, the role
operational model that can be translated
it can, and is, playing in organizations like
from organization to organization, I just
ENGIE are shining examples of the true
don’t think we have institutionalized a
power of procurement.
Re co n si der ing value: p rocurement a n d a s u sta i n a b l e f u t u re
“ ...from an organizational perspective, I think we need to really think about a much better way to measure procurement’s contribution and value to the organization besides those hard saving metrics, right?” — Renee Leong CP O, EN GIE N orth A m e ri c a
www.cpostrategy.com
9
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It’s time to close the loop on all your spend Global economic uncertainty, continued disruptions and sharp top-line declines have created a harsh new reality for companies across industries. What does that mean for CPOs? Mounting pressure to increase resilience, sustainability and revenue while eliminating cost that doesn’t deliver value. It’s a big challenge, and it calls for a robust response. That’s why Accenture developed Closed Loop Spend Management (CLSM). It’s an approach that helps companies take a forensic look at their entire spend to identify opportunities to turn non-working money into working money. At the same time, companies can embed new processes, capabilities and behaviors to capture those opportunities and sustain the value generated.
Don’t just cut spend. Transform it with CLSM. Take a zero-based look at spend CLSM starts by applying a zero-based perspective to all third-party expenses to identify every opportunity to remove costs that aren’t creating value. With zero-basing, you can reimagine your cost base as what it should be if you were to start from scratch. These savings can fund investments in innovation, distinctive capabilities and specific activities that drive growth. Sophisticated artificial intelligence and machine learning tools can help you gain full visibility into your costs and supply base. And these tools allow you to categorize all your spend to identify specific savings opportunities to pursue.
Think bigger than pure cost savings CLSM also drives resiliency and responsibility. Sustainability-enhanced zero-basing goes beyond cost savings to help you create a strong purpose for cost reduction. It can enhance trust and help you get buy-in for change among internal stakeholders. And, it adds a dimension to savings that’s attractive to the external investor community.
By incorporating responsible sourcing analytics tools, CLSM can also help you visualize current sustainability performance compared with your peers. The result? A clear view of how cost-saving initiatives can influence sustainability, and how sustainable interventions can save money.
Change behaviors and mindsets CLSM powers new ways of working across the enterprise. It’s a durable and repeatable process, and a true decision-making and management tool that can become core to your company’s culture. CLSM brings together procurement, finance and the business to collaboratively agree and speak the same language. Together, you can make insight-based decisions about the full range of savings opportunities CLSM has uncovered. Doing so effectively “closes the loop” with planning and budgeting activities and ensures that procurement is an integral part of all purchasing decisions.
New procurement value. Delivered. CLSM can generate significant benefits for any company, in any industry. Several companies Accenture has helped adopt CLSM are seeing cost savings of $1 billion or more. And they’re establishing company-wide cultural change to help control costs on an ongoing basis to improve margins and unlock funds for growth. With those kinds of results and the challenges you face, isn’t it time for you to take a fresh look at how your company spends its money?
For more information on Closed Loop Spend Management, visit accenture.com/clsm Copyright © 2021 Accenture. All rights reserved. Accenture and its logo are registered trademarks of Accenture. Accenture is a global professional services company with leading capabilities in digital, cloud and security. Combining unmatched experience and specialized skills across more than 40 industries, we offer Strategy and Consulting, Interactive, Technology and Operations services — all powered by the world’s largest network of Advanced Technology and Intelligent Operations centers. Our 537,000 people deliver on the promise of technology and human ingenuity every day, serving clients in more than 120 countries. We embrace the power of change to create value and shared success for our clients, people, shareholders, partners and communities. Visit us at www.accenture.com.
“We all understand the importance of driving cost savings for an organization. It is absolutely a critical part of our role,” says Leong. “But from an organizational perspective, I think we need to really think about a much better way to measure procurement’s contribution and value to the organization besides those hard saving metrics, right?” “Let’s look at how successful we are in being able to help support development teams with competitive and creative proposals to win more energy bids, to get more business opportunities, and how well we actually help the business organization manage supply chain risks and execute projects on time and under budget,” shares Leong. “How do we measure how well we actually provide solutions to business to solve problems? We don’t have those metrics. It’s very important right now and, as an organization, we need to rethink the way we
in Leong’s eyes, is right at the heart of the
should measure our procurement efforts.”
business. In her own words: procurement
A procurement leader with a wealth of leadership, category management and transformation experience under her belt,
is the hub in the center of a wind turbine with three blades. “Procurement is the connection with
Leong was brought into ENGIE North
suppliers and our business. That’s really
America in 2018 to oversee Strategic
our function. The value that we extend to
Sourcing and Supply Organization and
our suppliers and our business is done
Digital Procurement Transformation to
so through those three blades,” she says.
support ENGIE as a global energy leader.
“The first blade represents how we help
Where procurement fits into the equation,
ENGIE to make a difference. We want to
Re co n si der ing value: p rocurement a n d a s u sta i n a b l e f u t u re
sits in the perfect place to really have the opportunity to look into what the supplier can offer to us and understand the problems the business is facing and how serve ENGIE’s business transformation
we can connect and work together to
goal. We want to be more focused on the
try and to find the solution,” says Leong.
performance and help the company gain
“Simply put, we’re able to leverage tech-
competitive advantage, and we really hold
nology and the supplier’s creative solu-
ourselves accountable to this mission.” As
tions to solve our business problem.
such, the procurement team has consist-
We are an army of problem solvers.”
ently exceeded performance saving targets each year over the past 3 years.
The third blade is perhaps the most important one as it speaks to a broader
The second blade represents creating
conversation around the shifting nature of
business value by working with the busi-
procurement. For Leong, the third blade is
ness and the suppliers. “Procurement
all about the culture of the team. “How are www.cpostrategy.com
13
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Re co n si der ing value: p rocurement a n d a s u sta i n a b l e f u t u re
we going to develop as a team?” she says. “Procurement is constantly shifting and evolving, so we want to make sure we are adapting our mindset and how we work with the business to build more sustainable value,” she says. “How are we going to develop new ways of working together? We should encourage diversity, cherish our supplier relationships and build trust with our internal key stakeholders. These are the essential ingredients for what we want to achieve.” Procurement transformation is well trod-
“ Simply put, we’re able to leverage technology and the supplier’s creative solutions to solve our business problem. We are an army of problem solvers.” — Ren ee Leo n g C P O, E N G I E N o rth A m e ri c a
den ground, but it remains very fertile and as businesses the world over continue to invest in and communicate their procurement transformations, it’s important to recognize what exactly is changing. As Leong says herself, if we are changing
naturally, this created a challenge and
the way we measure procurement and its
thus, the transformation was born.
value, how are we actually going about it?
“It was actually the first opportunity for
For ENGIE, the procurement transfor-
me to say, “Hey, this is a great opportunity
mation can be broken down into three
for us to really try to standardize and opti-
parts: 1. strategy and process, 2. technol-
mize and, most importantly, simplify the
ogy and 3. sustainability. At the time of
source to pay process,” she says.
her appointment, ENGIE had completed
“The way that we need to do it is
the divestiture of its coal fired assets and
through technology. Procurement tech-
acquired new businesses focusing on
nology is key in streamlining the oper-
low carbon energy and services as part
ational efficiency and gives us greater
of the business transformation. What
control and enables a more consistent
this brought with it (alongside growth)
and transparent process.”
was multiple business models, different systems and different processes and
To this end, Leong started a digital transformation journey to standardize source to www.cpostrategy.com
15
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contract to pay business process by using one single procurement platform across all businesses. She introduced a whole new suite of source to contract to pay procurement solutions in collaboration with Coupa as platform provider and Accenture as implementation partner. Over a 21-month period, this procurement suite was implemented in 11 business units and enabled significant efficiencies throughout all procurement activity. Leong is extremely proud of the results: 90% of all purchase orders can now be raised automatically and a PO backed invoice rate of 94%. “We also mapped over 90% of spend with category classification and 80% spend under contract - all through the new system,” she adds. Leong is also keen to highlight that over 80% of supply onboarding is now achieved electronically with suppliers in a ‘self-service’ model. “The self-service model basically allows suppliers to come onto our system, provide all the information and set them up as our active suppliers,” she says. “This allows for real time collaboration with the suppliers, which in procurement is crucial. This in turn allows us to capture the majority of spend across all the business. Capturing accurate category spend data and insight is not only critical for procurement to identify saving levers and manage effective supplier relationships. www.cpostrategy.com
17
Renee Leong Chief Procurement Officer. ENGIE North America Renee Leong is Chief Procurement Officer of Strategic Sourcing & Supply Organization at ENGIE North America (over $3 Bn spend). She leads a team of category management, strategic sourcing, performance management and procurement operations professionals across US & Canada business entities. She has a passion for Procurement and transformation, having been in multiple industries with significant leadership, category management and global sourcing experience. Over the past 2 years, Renee has led the Procurement transformation at ENGIE North America, implementing digitalization of source-contract-pay process to enhance Procurement capability and improve operational efficiency, expanding the scope and strategic influence of the team, helping connecting suppliers with business to develop innovative solutions together, and accelerating sustainable and inclusive procurement.
Re co n si der ing value: p rocurement a n d a s u sta i n a b l e f u t u re
It is also important for the business to understand our commitment with the suppliers and our supply market exposure. This realtime data means real transparency, which benefits everyone in the ecosystem.” While the technology is not the defining feature of this transformation, it does play a key role in building the foundation for the future of procurement at ENGIE, which in turn reflects the future of ENGIE as a business. As the company divested away from oil and gas, and moved more towards renewable energy, procurement had to evolve with it. The technology to automate the procurement process acts as a true enabler for procurement to be able to support that evolution. Leong recognized that in order to do this, category management was needed and in particular; new expertise was required. As a successful business working in one particular market for over a decade, pivoting to a new arena will bring about new challenges and so, as part of procurement’s rising credibility to the cause, Leong seized the opportunity. “We need to speak the language of the business and really become the experts in all areas,” says Leong. “It goes back to the question about what our value is. We won’t just be category managers who know this market. We also capitalize on the disruptive technology in our industry. We are managers that are truly helping the www.cpostrategy.com
19
business to leverage the disruptive tech-
the suppliers and provide the solutions to
nology in our industry by providing guid-
enable our business to compete.”
ance and looking at what the supplier’s
Over the last two years, Leong had the
latest offering in products and technology
unique opportunity to lead procurement
are. We also look at what our business
due diligence and manage post acquisi-
needs are so we can work with strate-
tion integration with the acquired entities.
gic suppliers to pilot the new technology
Taking advantage of economies of scale
with promise of higher power genera-
across businesses in North America
tion output or test more flexible systems
and leveraging existing ENGIE frame-
to enable us to generate a more reliable
work agreements, the procurement team
supply of power while lowering our oper-
has been able to deliver cost benefits to
ational cost.”
these entities while introducing major
“This way, our value becomes so much
suppliers such as Sonepar and United
more to the business. Our proposition is:
Rental to provide better services and
we not only understand the market, but
support for them.
we also want to make sure that we bring
As procurement continues to be more
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Re co n si der ing value: p rocurement a n d a s u sta i n a b l e f u t u re
“ Procurement is constantly shifting and evolving, so we want to make sure that we are adapting our mindset and how we work with the business to build more sustainable value” — Renee Leong CP O, EN GIE N orth A m e ri c a
digitally driven, organizations and their
procurement talent. Our teams feel really
people need to be capable and comfort-
good about how we are not only providing
able with the technology at their disposal.
the traditional contribution to the organi-
With ENGIE’s transformation, Leong has
zation through savings, we’re also taking
given her teams an opportunity to expe-
center stage and leading the initiative and
rience, learn and utilize some of the best
playing a really critical role in terms of
technologies in the market and how they
helping to improve the environment. Once
drive true best-in-class procurement. This,
again, it’s about how we can define our
she feels, is key in ensuring her teams are
value as a function.”
upskilled, engaged and truly excited to
Any procurement professional will
be a part of this journey. But it’s not only
understand and recognize that the func-
technology that excites the modern-day
tion possesses a very unique position
procurement professional.
with regards to supply diversity. Given
“The top talents really want to work
the divestment of its assets, ENGIE has
for a company that promotes sustaina-
focused on decreasing its carbon footprint
bility, diversity and inclusiveness,” she
and providing sustainable product solu-
says. “We’ve done a lot within ENGIE in
tions to its customers all over the world.
terms of bringing sustainability and inclu-
But this is just one example and there’s
sive procurement into the supply chain.
much more it can and is doing as procure-
This is key to attracting and retaining
ment through its vast supply chain. www.cpostrategy.com
21
“ The top talents really want to work for a company that promotes sustainability, diversity and inclusiveness” — Re n e e Leong CP O, EN GIE N orth A meric a
“We have the power to actually influence how the product is being made and how the services are being offered to us so we can really help drive positive change
Leong. “These are the suppliers we want
to society,” says Leong. “ENGIE is very
to do business with. But for those who are
aggressive in this area, so procurement
not meeting the requirement, what we try
actually has a goal from 2020 through
to do is to focus on working with them to
2030 in that 70% preferred and major
make sure they are taking action and we
suppliers must have Corporate Social
provide support to help them get there.
Responsibility (CSR) rating above the
I’m really excited about the action we will
controlled CSR risk level by 2025, meas-
be taking this year, in partnering with our
ured by EcoVadis as well as 100% of our
suppliers to make sure that we’re taking
preferred and major suppliers will be able
steps to not only assess, but also act on it.”
to meet CSR requirements by 2030.” ENGIE utilizes EcoVadis as its strate-
When trying to address sustainability, it requires an upfront commitment and in
gic partner to assess all of its major and
most cases an investment in order to make
preferred suppliers on their CSR. “We
it work. Leong firmly believes however that
really want to focus on those who are
the investment is nothing when compared
meeting our CSR requirements,” adds
to the long-term value it will bring both to
Re co n si der ing value: p rocurement a n d a s u sta i n a b l e f u t u re
the business and to the world around us.
sustainability and the opportunities
She notes it’s going to help ENGIE as well
for real change will be endless.”
as the suppliers in the long run to be more
While success has indeed come the
operationally efficient, to be able to reduce
way of Leong as part of this transforma-
overall costs and most importantly, make a
tion journey, the road ahead is perhaps
real difference on the environment.
equally as significant (if not more so)
“It’s going to be a win for them and
than the previous years. Having achieved
for us,” she says. “We are setting a good
key milestones around standardized
example to showcase and inspire the
procurement processes, digital solutions
procurement leaders and our peers to
to enable greater efficiencies, bringing
say, hey, we can do this and there is a
in supplier innovative solutions for busi-
way for us to work together and help
ness, and working with teams and suppli-
our environment. Look within your own
ers around sustainability, diversity and
company at what you can do and be
inclusivity in the supply chain, the next 12
very open minded. Welcome the ideas
months look to be ones of doubling down
from your suppliers on how to improve
on all of this great work. “We want to do www.cpostrategy.com
23
Re co n si der ing value: p rocurement a n d a s u sta i n a b l e f u t u re
small businesses that, whether it’s womenowned, minority-owned, or whether it’s veteran-owned or disabled, these are the variety of the supply that becomes part of our supplier ecosystem. It helps us to drive competitiveness because it allows us to have more qualified suppliers to compete and provide us services and it also helps stimulate economies because we engage with local suppliers.” Procurement transformation is a conversation driven by real change. Add sustaineven more in terms of digital procure-
ability into the equation and that change
ment technology and build even smarter
becomes increasingly difficult for some.
AI-enabled contract systems to help our
But despite this, Leong is a firm believer
procurement further,” muses Leong. “In
that in order to make change, whether it is
the future, I think procurement needs to
large scale business changes or changes
be leaner and more agile so we need to
globally, you need to be bold. “Look for
do more, for example, by utilizing robotic
new and different ideas and opportuni-
process automation (RPA) to take away
ties to help to improve your business, or
many tactical activities that consume a
to help solve a problem, overcome what-
lot of our team’s time and free us to focus
ever barrier that we need to overcome and
more on strategic activities such as cate-
improve our society,” she says.
gory management and supplier management to support the business.” “I’m extremely passionate about
“Then you can challenge the status quo. If you find there’s opportunity, seize it. It’s the only way that can actually help to
supplier diversity and this is a focus for
continue to drive the improvement. As long
ENGIE North America. We are identifying
as you take the calculated risk in order to
the areas where we can expand our inclu-
drive the success, being bold and taking
siveness and supply diversity to better
that risk is always worth it.”
support ENGIE’s strategy. Supply diversity is important because it enables flexibility and agility. These are the www.cpostrategy.com
25
THREE WAYS RELIABLE SUPPLIER DATA CAN YOUR PROCUREMENT STRATEGY Thre e ways reliab le sup p lier data c a n s u p erch a rge yo u r p ro cu rement d ata
Why supplier data can make or break procurement
Written by Jim Bureau, CEO of JAGGAER
www.cpostrategy.com
27
upplier data is the lifeblood of procurement and leaders rely on the strategic insights they get from data analysis to make decisions that reduce risk, boost cost savings and drive performance. Even so, if the data is faulty, the insights will also be faulty, and a surprising 81% of companies say they are not completely confident in their supplier data. There are a variety of reasons for this: Suppliers may not always keep their data fully updated in self-service portals. Information isn’t enriched with independently verified data to the level procurement teams need, to include diversity status, proof of compliance, data protection policies and more. Researching, assessing and auditing suppliers can be tedious and time-consuming. This means organizations make decisions on incomplete or unreliable data or skip the process altogether. Thre e ways reliab le sup p lier data c a n s u p erch a rge yo u r p ro cu rement d ata
These challenges have long plagued
Supplier financial health also remains a
the procurement function. The issue has
top concern. According to riskmethods’
come to the forefront of procurement
new report, the biggest supplier risks
discussions over the past 18 months
aren’t directly related to COVID. In fact,
for many reasons, but most notably
several key indicators of supplier financial
because organizations have had to
instability increased over the last half of
make rapid decisions in response to the
2020, including ownership structure, field
COVID-19 pandemic, have increased
issues such as product safety risks and
concerns about business integrity, and
force majeure warnings. Reliable supplier
face calls from government and civil
data is instrumental in meeting these
society for greater diversity and equality
challenges and building supply chain
of opportunity.
resiliency, agility and diversity. www.cpostrategy.com
29
Thre e ways reliab le sup p lier data c a n s u p erch a rge yo u r p ro cu rement d ata
ABOUT THE AUTHOR Jim Bureau is CEO of JAGGAER, which celebrated 25 years in business last year. Jim is responsible for the company’s overall vision to transcend customer experience by providing intuitive and intelligent spend management solutions that allow clients to transform their supply chain.
Here are three ways reliable supplier data supercharges procurement. 1. Drives agility with deeper visibility. One of the most important lessons we’ve learned from COVID is the criticality of supplier diversification. When production slowdowns, closed borders and fluctuations in customer demand caused global supply shortages, organizations had to adapt quickly and find alternatives. Outdated or incorrect supplier data prevents procurement from confidently deciding on the fly which supplier is the next best to tap. Total visibility and a deep understanding of the supplier base – capabilities, current orders, past performance, financial risk indicators, whether they’re thirdparty risk certified, have been audited for cybersecurity vulnerabilities and more – are critical for being able to respond and www.cpostrategy.com
31
bounce back from unexpected supplier events. Without this 360-degree view, how do you know if your backup supplier can deliver? What if they can deliver, but are out of compliance or close to bankruptcy, which opens you up to new risk? Disruptions are inevitable. Reliable data puts procurement in a position to effectively navigate change, reduce risk and take advantage of new opportunities. Thre e ways reliab le sup p lier data c a n s u p erch a rge yo u r p ro cu rement d ata
2. Boosts supplier diversity with
exceed buyers’ expectations. Companies
detailed insights.
that also allocate 20% or more of their
Increasing spend with diverse suppliers
spend to diverse suppliers attribute
is the right thing to do because it contrib-
10-15% of their annual sales to supplier
utes to social and economic value by
diversity programs. A diverse supply
helping traditionally underrepresented
base supports marginalized groups and
groups that typically encounter barriers
advances innovation, opens more chan-
to growth. Diversity is also good for busi-
nels for goods and services, drives prices
ness. According to a study by The Hackett
down and ultimately contributes to bottom
Group, nearly all diverse suppliers meet or
line success. www.cpostrategy.com
33
Poor data quality is often a roadblock to reaping these benefits. Organizations don’t always have clear insight into supplier diversity status and which companies are considered historically underutilized vendors -- minority, women, veteran, LGBT-owned or Small Business Administration-defined small business vendors. This makes it incredibly difficult to understand the inclusivity of the supplier network and where to boost representation and spend. Reliable supplier data equips organizations to confidently identify and fill gaps and invest in the suppliers that directly support company values and initiatives, whether that’s diversity and inclusion, corporate social responsibility, sustainability or another important cause. 3. Strengthens supplier relationships with one source of truth. If data is the lifeblood of the function,
– procurement history, supply catego-
supplier relationships are the heart.
ries, financial stability, purchasing and
Strong, collaborative partnerships drive
contract records and any other signs of
product quality, risk reduction, compet-
the supplier’s relationship to the organ-
itive advantage, growth and more.
ization. This insight enables teams to
Cultivating that type of relationship with
segment out business critical partners,
strategic suppliers requires intentionally
identify any risky partnerships and move
managed insights.
forward mutually beneficial opportuni-
Reliable and centralized data helps
ties that establish trust and unlock new
procurement get an intimate and
value. The better you know, communi-
complete understanding of suppliers
cate and work with your suppliers, the
Thre e ways reliab le sup p lier data c a n s u p erch a rge yo u r p ro cu rement d ata
more likely these partners are to help
In fact, Gartner research found that
you address your own needs.
poor data quality can cost businesses, anywhere between $9.7 and $14.2
The bottom line Not having reliable data to guide
million a year. With access to stronger and more reli-
procurement decisions is like driving to
able supplier data, procurement organ-
an unfamiliar destination without a map
izations can broaden their supplier
or GPS. You might eventually get there,
network in a meaningful way that super-
but you’ll likely have taken a wrong turn
charges strategy, maximizes effective-
or two, and spent more time and gas
ness and speeds the path to achieving
money than needed, in the process.
critical objectives. www.cpostrategy.com
35
A quick look at… Digital Mind Earlier this month, JAGGAER announced a new strategy aimed at boosting customer success in the adoption and use of its source-to-settle JAGGAER ONE platform.
Written by
Dale Benton
There’s a new data - driven digital
with more intelligence on all aspects of
procurement strategy in town. It’s called
their spending and delivering more stra-
JAGGAER Digital Mind. Digital Mind is
tegic outcomes throughout their digi-
a core set of advanced technologies
tal transformation. This is the promise
that incorporates prescriptive and
behind Digital Mind.”
predictive analytics, machine learn-
As part of the broader JAGGAER 21.1
ing, natural language processing and
release, the company has launched
other innovative capabilities to deliver
three unique solutions: JAGGAER
solutions and capabilities across the
Adopt, Assist, and Advise. Each lever-
JAGGAER ONE platform.
ages the capabilities of the JAGGAER
It goes without saying that, when
Digital Mind to provide companies and
combined, these solutions will signif-
their users with more insights, contex-
icantly boost organizations’ return on
tual guidance, decision support, and
investment (ROI) in the digital transfor-
automation to improve adoption and use
mation of procurements.
of the JAGGAER ONE platform.
“Our company’s focus is 100% on customer success,” explains Jim Bureau, CEO of JAGGAER. “We have developed the most advanced solution suite in procurement technology. We want to go beyond that to empower users on every step of their journey, by providing them
CHECK OUT Danish Crown A procurement transformation ( F e a t u r i n g J AG G A E R ! )
Thre e ways reliab le sup p lier data c a n s u p erch a rge yo u r p ro cu rement d ata
Watch now: Jim Bureau and Tealbook CEO Stephany Lapierre on why supplier data is crucial
JAGGAER Adopt increases the success
provides real-time support and guidance
and ROI of a procurement organiza-
to complete tasks, and even takes on
tion’s digital transformation by giving
some tasks on behalf of the user.
360o visibility into user adoption, feature utilization, and compliance
JAGGAER Advise enables users to be
with company-defined processes,
more proactive in recognizing areas of
coupled with guided help, training,
improvement and mitigating challeng-
tips and tutorials to improve skills and
ing situations such as supplier risk. It
increase user performance exactly
enables procurement professionals to
where and when the user needs it.
access data-driven actionable insights and recommends next steps to mitigate
JAGGAER Assist is an intelligent virtual
the risk of supply disruptions, supplier
assistant, JAGGAER Assist, helps users
qualification and performance issues,
find specific information or reports,
and underperforming sourcing events. www.cpostrategy.com
37
Diversification through Procurement Manoel Guedes (Procurement Director) and Douglas Klimak (Head of Procurement Transformation), look at how procurement can prove essential to Bradesco’s future...
Written by
Dale Benton
Produced by
Richard Deane
Di ve rsi fi c at ion t h rough P rocurement
www.cpostrategy.com
39
A
s one of the leaders in Brazil’s private financial sector, a procurement transformation
for Banco Bradesco carries with it a responsibility to unlock real change for procurement throughout the country. Maturity, particularly in procurement, is a key goal that underlines procurement transformation for many organizations and for Bradesco this is no different. Look across the procurement arena across Brazil and the picture is somewhat different when compared to procurement in Europe or the US. For Douglas Klimak, Head of Procurement Transformation at Banco Bradesco, he recognizes the significance of his company’s transformation in moving the procurement needle further to where it should be for both the company and wider Brazil. “I do feel that we have a huge opportunity to elevate procurement function
Procurement, as we know, has spent
in Brazil,” he says. “All businesses are
the best part of the last decade trans-
being transformed aiming to be more
forming in the eyes of the board into a
innovative, digital and cost effective, and
more strategic function that aligns with
Procurement has all tools and disciplines
(and sometimes dictates) the broader
to play a protagonist role in that scenario.
strategic roadmap for organizations the
As a result, Procurement acting strategi-
world over. Klimak has seen this first
cally will drive a more mature education
hand and recalls his earlier days where
process for procurement professionals
he was almost admonished for electing to
in the country. We face a long path ahead
follow a career in procurement. “I’ve been
of us in the next few years to truly elevate
working for a business area and was told
the procurement function in Brazil.”
previously that procurement was a back
Di ve rsi fi c at ion t h rough P rocurement
office area inside a financial organization
where increased competition (such
with no protagonist,” he says. “It wasn’t
as fintechs) and a changing customer
until I was inside the function myself that
behavior has forced a rethink as to what,
I began to understand just how important
and how, banks can provide for their
it is for a company and I believe that this
customers. Diversification is not a new
importance continues to grow year by
concept, but diversification through
year which provides huge opportunities to
procurement is most certainly the
establish a protagonist career,” he says.
way forward for Bradesco and this is
For Bradesco, and banking in general,
because procurement is moving away
procurement transforma-
from cost reduction and avoidance
tion is born out of an
and focusing on adding value to the
environment
Business and their strategies. www.cpostrategy.com
41
Rethinking the future of Procurement for the new needs
imposed by key business imperatives The role of the procurement executive is changing and all over the world, the maturity of procurement is an evolving conversation. In areas such as the US and UK, procurement sits in a significantly elevated position within an organisation, with a broader and more strategic scope of action. In others, such as Brasil, the procurement maturity conversation to beyond transactional scope, is only just beginning. “The role should be much more strategic,” explains Rodrigo Damiano, Partner, PwC. “Procurement must be the main element of the whole digital transformation that companies are partaking in right now, but with a completely different role, a completely different way of interacting, and way of proposing alternatives to the business.” In Brazil, most of the procurement fuctions is still structured and focused on cost, control, compliance and risk. Procurement is designed to keep the transactional engine running. PwC Brasil is supporting Bradesco’s procurement transformation to become a key cog in achieving innovation and growth.
In order to transform procurement in such a huge organization, a strong partner is required. The first step that was taken together, was a step towards benchmarking. Bradesco and PwC looked across the globe at leading procurement functions in order to truly understand what the company wants (and needs) its procurement to be. In doing this, visiting international companies and assessing Bradesco’s existing infrastructure, PwC and Bradesco identified a vision. The challenge comes from bringing about real change while maintaining business continuity. Disrupt the cog in the middle and the whole system falls apart. To overcome this, Damiano believes that knowledge and level of specialization of the personnel are key. “It’s about possessing a deep knowledge of the business, the pain points and complexities across the business - which procurement is in prime position to possess,” he says.
“Combine that with experience of the categories and the deep knowledge of the suppliers’ market and then you generate great value for the business.” “And then there’s the data, which we use to support the discussions, the prepositions and everything that is part of the life cycle of the procurement. By accessing and understanding quality data, procurement can spend quality time focusing on strategic and tactical discussion, using deep business knowledge, the experience of the suppliers’ market and backing it up with the data.
“Procurement must be the main element of the whole digital transformation that companies are partaking in right now, but with a completely different role, a completely different way of interacting, and way of proposing alternatives to the business.”
Bring challenges. Take trust.
www.pwc.com.br
“It doesn’t matter what kind of transformation you have, or what kind of operating model you design, it’s not possible to have the benefit if you don’t change the way, the direction and the board thinking.”
Rodrigo Damiano Partner, PwC Brasil Supply Chain Consulting leader
For me, if we combine these three elements, we can have a procurement function that is well positioned and takes real value to the business.” Change management; two words that can make, or break, a transformation and yet change management is a key part of the way transformation provokes the organization. In procurement, leaders need to communicate this to the organization and show in a structured way that it is generating results. “You are helping the business generate results, to create or increase the business and to meet strategic targets,” he says.
PwC Brasil
@PwCBrasil
“Change management needs to be aligned to everything that the procurement is promoting, creating and discussing during the transformation.” With the larger, legacy-laden organisations, global benchmarks and/or partner/consultants can prove key to provoking the conversation. “It doesn’t matter what kind of transformation you have, or what kind of operating model you design, it’s not possible to have the benefit if you don’t change the way, the direction and the board thinking,” he adds.
PwC Brasil
@PwCBrasil
PwC Brasil
“Everything should start from the beginning. Start from a maturity understanding, look at the process, organization and technology. Bring in global, local and industry specific benchmarks and look at both the qualitative maturity level and what your current KPIs are. Then you can see what the main areas of opportunities are, what’s the size of the expected benefits, how long the whole transformation roadmap will take and how to prioritize your movements in order to begin achieving the wins required to gather momentum”, ends.
@PwCBrasil
PwC refers to the PricewaterhouseCoopers Brasil Ltda. member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/ structure for further details. © 2021 PricewaterhouseCoopers Brasil Ltda. All rights reserved.
“We are the main link between the company and the market,” explains Klimak. “We should have a clear view of business needs and what the market is offering to bring innovation for the company. To achieve that, Procurement should be at a good mature level with a close relationship with business areas. Right now, we are reshaping procurement by looking at the end to end journey, considering all aspects of the change: people, process, governance, structure and system. Not only looking for the purchase side but also establishing demand, contract and supplier management disciplines, procurement is increasing the risk coping in Bradesco. I’m seeing firsthand just how much the procurement department function can add value to the company.” Procurement is the main link between the company and the market, as Klimak highlights, but to think of it as simply like
challenging the way that we have
that possibly reduces the true poten-
done our job and we are willing to do
tial and scope of the function. Manoel
it far earlier. This way, we can start the
Guedes, Procurement Director, believes
procurement planning sooner and
that the procurement area must be part
find out how we can better support the
of the very first moment when businesses
business needs.
are discussing the needs. “In sticking with a traditional view
Guedes continues: “We’re also challenging ourselves to go further. Not only
of procurement, our scope of action
looking at the pricing dimension, but
has been limited and, consequently,
the services that are actually delivered
the added value,” he says. “We are
and the quality of them. This journey is
Di ve rsi fi c at ion t h rough P rocurement
about looking at how we can improve the role of procurement and bring more value to business.” So Bradesco is on a procurement journey, one that will see procurement walk hand in hand with all areas of the business and their strategies and be the key cog in achieving innovation and growth. Klimak outlines it as such: when other business areas think about their strategy, procurement needs to participate and play an active role in that strategic discussion. For him, if Procurement departments achieve that level of recognition, it means that the transformation is succeeding. “We are moving closer to the business to add value to their strategy,” he says. “By doing this, we take the company to another level with regards to costs and revenue, innovation and customer experience.”
“ We are moving closer to the business to add value to the strategy. By doing this, we take the company to another level with regards to costs and revenue, innovation and customer experience” — Do u g l as Kli m a k Head of Procurement Transfor m ati o n , B an c o B rade s c o
www.cpostrategy.com
45
Challenge number one is identifying
broken? Bradesco has a strong legacy
the why, which Bradesco did and so chal-
of successful operations and Klimak
lenge number two becomes: how? What
says bringing best practices from the
does it look like and how is the company
hub of Procurement was very important
going to get to where it needs to be?
because it allows people to learn from the
This is where Bradesco worked closely
best of the best and to see for themselves
with PwC as Klimak recognizes that in
the true benefit that will come from the
order to transform procurement in such
transformation.
a huge organization, a strong partner is
“This benchmarking allowed us to
required. The first step that was taken
understand what are the best world
together, was a step towards benchmark-
class procurement standards and the
ing. Bradesco looked across the globe at
principal issues that will be addressed in
leading procurement functions in order
the next future.
to truly understand what the company wants (and needs) its procurement to be. In doing this, visiting international
It’s not only about bringing more efficiency or cost reduction, but actually boosting the innovation process of our
companies and assessing Bradesco’s
organization. Procurement as a strategic
existing infrastructure, Bradesco iden-
part in order for us to add more value in
tified a vision. And Klimak speaks of
our operations and best services to our
another key benefit that comes from
clients,” adds Guedes.
striking a key relationship with a strong
A common challenge that many
partner. “Simply put, it brings a good
procurement professionals face is:
sense for the project,” he says. “What I
procurement knows procurement, but
mean is that I can show the business that
other business areas and disciplines do
we have a strong partner, that we are
not. Klimak is all too aware of this chal-
bringing the best practices in the market,
lenge and that notion of credibility helps
and we know that it works. It solidifies
communicate the value of procurement to
credibility for the project.”
those who simply do not see it for what it
This credibility proves crucial in an
is. But the key for him is recognizing one
organization that has operated success-
thing. “We are specialized in procure-
fully for a number of years. When trans-
ment, but we are not specialized in other
formation enters the conversation, the
business matters,” he laughs.
first question is often why fix what isn’t
“As part of that international
Di ve rsi fi c at ion t h rough P rocurement
Manoel Guedes, P r o c u r e m e n t D i r e c t o r, Banco Bradesco
www.cpostrategy.com
47
“ ...if we aren’t a collaborative department, and if the business doesn’t understand our idea or how we can help them to achieve their goals, it means they don’t believe in us...” — D o u gl as Kli ma k Head of Procurement Tra nsform ati o n , B an c o B rade s c o
benchmarking we looked at how those
In order for Bradesco to do this, Klimak
companies moved Procurement from a
speaks of how this movement can only
transactional role to a strategic one and
come once procurement has reached
we saw that all of them even though they
that higher strategic level in the company.
are in a high mature level they are still
“To create that environment where busi-
running long transformation journeys.
nesses understand the Procurement
Also, we looked at how procurement
importance, Procurement should be
works closer with the business and to
customer oriented. What I mean by that
do that they put in place a strong talent
is, all pillars of procurement (people,
management and also create an envi-
process, governance, structure and
ronment to establish the procurement
system) should focus on how we can
business partner role which has a strong
make the business grow. Working with
knowledge about the business and make
this mindset Procurement will become
a link between those areas. Increasing
a more sexy area mainly for talent (both
the business knowledge inside procure-
existing and future talent)”.
ment and having strategic discussions
“Another important aspect that we
with them, the businesses start under-
mapped during benchmarking even
standing how much value procurement
though we are talking about Procurement
can bring to their operations.”
4.0, focusing only in technology doesn’t
Di ve rsi fi c at ion t h rough P rocurement
increase the procurement maturity level
waves: fundamental changes – rede-
because it doesn’t solve all procure-
sign the operating model, consolidation
ment problems, especially relationship
– automation; and then evolution – new
matters – firstly it is important to focus on
techs (AI, Blockchain, etc.).
organization redesign, people upskilling
In transformation and change, results
and culture change – those items play
speak the loudest and for Klimak and
an important role to put procurement in
Bradesco these results will continue
another level. When procurement already
to define the road ahead for procure-
defines the business model, technology
ment. While this procurement journey
should come to support that operation
has certain KPIs that are unique to
and of course bring automation, effi-
Bradesco, such as cost reduction or risk
ciency and time to market.”
mitigation, the one overarching achieve-
In order for Bradesco to follow those
ment is that move towards becom-
good practices, Klimak says that the
ing a true business partner. Achieving
transformation is established in three
that status is the key to enabling true www.cpostrategy.com
49
innovation, increased revenue and reducing the costs of operation. In the quest to achieve this, Klimak is
reach their needs,” he says. “Our people are really committed to the Transformation Project. We take
quick to highlight that this isn’t HIS story.
good care of communication, what we
Nor is it Bradesco’s story. It’s the people
are doing and goals. We all share the
who make up procurement and those
same desire to elevate our procurement
collaborating and driving the movement
area to a world-class level. Sharing this
forward. This transformation is nothing
journey with our team has been the best
without the people. “When we talk
part of this project.”
about transformation, we are not just
A collaborative culture is all well and
talking about process, system, govern-
good, but it needs to be built on honesty
ance, or structure. We are talking about
and transparency. Procurement sits in
culture,” he says.
a very strong position within the busi-
“We are transforming our procure-
ness, but it’s also a very challenging one.
ment culture, increasing the scope of our
Procurement is an orchestrator for busi-
day-to-day activities. We are working
ness continuity and a conduit which all
very hard in branding our transformation. It’s easy for us to say: ‘This change is good so get on board’ so it’s very important that we take care of the communication and work very closely with our teams, and our people, to help them understand just how key each and every one of their roles are in all of this.” As Procurement Director, Guedes knows full well just how important people are. For him, Procurement will always be a job where people add the greatest value. “We must automatize processes and operational acquisitions, but the value that people add is incredible. People always bring the knowledge about markets, suppliers and the best way to Di ve rsi fi c at ion t h rough P rocurement
www.cpostrategy.com
51
Douglas Klimak Head of Procurement Transformation at Banco Bradesco Douglas has 14 years of experience working for Financial industry, leading transformations in a diversity of disciplines such as Business Intelligence, CRM, Digital Channels, Information Technology, Procurement and Retail Banking. He holds a bachelor’s degree in Business Administration, a MBA in Project Management, a Master’s degree in Lean Six Sigma and an International Executive MBA with extension classes at University of California, Berkeley and Stanford University.
Di ve rsi fi c at ion t h rough P rocurement
business areas run through. Procurement has a connection like none other and it’s important that when it engages with the business it can tackle the key issues that the business is facing. “As a cross-functional team, we should engage other areas on sourcing/purchasing discussions, creating an environment of cross-boundary ownership of tasks and problems and make all involved move to the same direction,” Klimak says. “We are involved in a hard scenario internally; if we aren’t a collaborative department, and if the business doesn’t understand our idea or how we can help them to achieve their goals, it means they don’t believe in us and they won’t open the space or the subject that we need to
“ Seamlessly working with the business to participate in their strategies and add value to those strategies is the best possible KPI we can achieve. If we keep this mentality, then I have no doubt that we will succeed” — D o u g las K limak H e ad of P ro c ure m e nt Tran sfo rm ati o n , B an c o B rade s c o
address value to them.” Guedes reaffirms the significance of
A procurement transformation is a
working closely with the business. “It’s
never-ending process of continuous
extremely fundamental. It’s impossible to
improvement, continuous challenge
add value to our internal clients if we are
and continuously pushing the bound-
not close with them,”
aries of what’s possible and while
“We are implementing business part-
Klimak and procurement at Bradesco
ners to our internal clients to better
are working hard to achieve consid-
understand their needs since the very
erable successes to date, tomorrow
start and manage it through the process.
is a new day. Over the next 12 months,
To do it, we have to be there from the
procurement activities will continue to
very beginning till the end. If we are
accelerate as Klimak looks to continue
distant from our internal clients, we will
to reshape the collaboration between
not be able to reach their needs, and the
procurement and business, implement-
organization will suffer.”
ing a new procurement platform and www.cpostrategy.com
53
Di ve rsi fi c at ion t h rough P rocurement
looking at how the procurement model
value to those strategies is the
can continue to inform and influence the
best possible KPI we can achieve.
future of the business.
If we keep this mentality, then I
For Klimak, when he started working on Procurement Transformation, he did
have no doubt that we will succeed.” Guedes adds: “At the beginning of this
so with a single belief that he consid-
journey, we knew that it was necessary
ers one key KPI for the transformation
to have a view of the best purchasing
success. He hopes this is a belief that
practices, the potential for the evolution
many others share.
of these functions and the value that
“Procurement, broadly speaking, has become so elevated that it finds
we could add to our organization. Now we know that our main objective
itself involved in the important discus-
is to implement an environment, where
sions because they have a policy in the
our people could continually improve
company, or they have the documents
the pillars of efficiency and innovation,
that make the business involve procure-
through agile and effective purchases.
ment, but I don’t believe that is the best
This journey is like a wheel that we will
way to be involved in Business matters,”
keep turning because procurement will
he says. “I don’t want to be involved
always evolve, but we have gained the
because it’s an obligation. I want to be
hearts of our people and are working and
involved because I add value to you.
we are committed to deliver a world-class
Seamlessly working with the business
procurement function that will play a key
to participate in their strategies and add
role in the future of the organization.” www.cpostrategy.com
55
An airline has many assets of course, but in procurement our assets are the people” J u rr i a a n Lo m bae r s , SVP & CP O, Air Fran c e - K L M
Procurement acceleration and certainty in the volatile airline industry
Pro cure ment t ransfor mat ion in t imes of u n cer ta i nt y
www.cpostrategy.com
57
Dale Benton Kiron Chavda
Written by Produced by
T
he continued evolution of procurement has seen ‘acceleration’ fast becoming the key
goal. 2020, and the COVID19 pandemic have applied copious amounts of pressure on an organisation’s ability to not only manage cash flow, but to secure a sense of stability in a future of uncertainty. Over the past ten years, procurement has been slowly stepping out of the shadows and moving into the centre of business and now it finds itself truly in the spotlight.
Jurriaan Lombaer s, SV P & C P O, A i r Fr a n c e - K L M
For Air France-KLM, operating within an incredibly volatile industry, procure-
excellence. Doing it in an ‘excellent’ way
ment has perhaps always been recog-
and raising the maturity of both procure-
nised as a vital cog in business continu-
ment and the wider business operations
ity. The evolution of procurement within
as a result. None of this is possible of
Air France-KLM comes in the form of
course, without investing in our people. An
seeking out and enabling innovation
airline has many assets of course, but in
and unlocking new opportunities and
procurement our assets are the people.”
value for the business. As part of a major
Ultimately, for Air France-KLM and its
procurement journey, the call-out to the
procurement journey, the goal is to drive
business now is: How do we optimise
greater consistency across the busi-
and accelerate procurement further?
ness. But a key challenge, and a chal-
“The core of what procurement does
lenge faced by many if not all CPOs, is
is build solid strategies and run sourcing
defining the journey and what procure-
projects to maximize value for our busi-
ment excellence and consistency means
ness stakeholders,” explains Jurriaan
for them. In order to embark on the jour-
Lombaers, SVP & CPO, Air France-KLM.
ney and make progress, the why, how
“It’s not only about doing it, but doing it
and what, must be answered and clearly
together with the business and in doing
identified. This is easier said than done.
so you need to consider procurement
In an industry discipline whose dialogue
Pro cure ment t ransfor mat ion in t imes of u n cer ta i nt y
“ Very often in procurement organisations we're so very busy with the execution, with the focus that we assume all stakeholder are aware and can see it. The reality is, very often they don't and so it's important that we bring our story forward, particularly when it comes to the buy-in as it whets the appetite to do more.” — Ju rri aa n Lom ba ers , SV P & C P O, A ir Fra nce-KLM
www.cpostrategy.com
59
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is completely dominated by notions of transformation, and all the trends and buzzwords that come with it, this is incredibly important and something that needs to be done right. “We need to ensure that between the two entities, Air France and KLM, that we continue to have a very open dialogue,” says Lombaers. “It’s also about looking collaboratively at how we do things, what can we learn from each other and what can we glean from looking at different industries or by many different ways to
L a u r e n s Vo n ke m a n , C o n t r o l l e r, P r o c u r e m e n t , A i r F r a n c e - K L M
try to benchmark ourselves. Whether that’s in how well we rate our sourcing
procurement realm; does the business
plans and execution or how well we’ve
know procurement? Lombaers is a long-
digitized. How data driven we are? How
time subscriber to the notion that the
efficient we are in our operations and the
procurement function needs different
way we organise ourselves? Look at this
ideas, different mindsets and different
first and foremost and the road ahead
approaches to enable true innovation.
becomes clearer.”
Ironically, it’s these different experiences
Lombaers was brought into Air France-
that lead to greater consistency.
KLM to lead this procurement transfor-
“Very often in procurement organisa-
mation journey, and right from the word
tions we’re so very busy with the execu-
go he set about understanding the busi-
tion, with the focus that we assume all
ness, the culture and ultimately what
stakeholders are aware and can see it.
procurement meant for Air France-KLM.
The reality is, very often they don’t and
During this time, he decided to focus on
so it’s important that we bring our story
one core element of procurement that
forward, particularly when it comes to
perhaps gets lost in the conversation:
the buy-in as it whets the appetite to do
storytelling. Procurement profession-
more,” he says. “But it also means that we
als know procurement, the challenge
need to start spending time on building
comes when you step outside of the
that story and have the data available. It www.cpostrategy.com
61
starts with getting the procurement function organized for that and valuing the effort that you need to do that.” Lombaers brought in Laurens Vonkeman, Controller, Procurement, Air France-KLM, to help enable and aid in that storytelling approach. Vonkeman understands exactly just how important that narrative is in getting your voice heard in an organization. “Storytelling is very often accompanied by reporting to the different stakeholders. Right now we are in the process of utilizing new data systems in order to create that story within the procurement community,” he adds. “We need to all be on the same page as a business so that we understand together how procurement operates. We’re reasoning financial awareness, ensuring that we are better connected and truly understand each other through reporting to tell the story.” Lombaers speaks more of the specific nature of Vonkeman’s role and what it means for the broader storytelling angle. Vonkeman will operate, to a certain extent, as an independent person. He is neither 100% a representative for procurement nor 100% a representative for the wider business, he sits right in the middle and listens and reports from both sides. What this does, Lombaers believes, is help establish and solidify Pro cure ment t ransfor mat ion in t imes of u n cer ta i nt y
“ We need to all be on the same page as a business so that we understand together how procurement operates. We’re reasoning financial awareness, ensuring that we are better connected and truly understand each other through reporting to tell the story.” — L a uren s Vo n keman , Contro l l e r, P ro c ure m e nt , A i r Fran c e - K L M
www.cpostrategy.com
63
the credibility of the transformation and allows procurement to really earn its seat at the table. While a procurement transformation does involve technology and indeed a new system, be it a P2P suite or a reporting/data capture solution, to focus entirely on this is to ignore the key element in which Lombaers has already highlighted: the people. After all, the best systems and software mean nothing if the people within the function are not equipped with the best skills and enabled by the right culture to grow and develop alongside the journey. At this point strategic sourcing comes into play. “You look at focusing the roles in procurement a little more and where you have people working in categories or domains, you want them to be able to focus on strategic sourcing, on collaborating with the business but also challenging the business and bringing new ideas in,” says Lombaers. “Ideally you want them to have data at their fingertips so that they can focus 80% of the time on creating value with and for the
more dedicated teams, to digitize those
business, and 20% on getting the data.
processes and make them more efficient
Versus the other way round. The more we
and consistent. Lombaers speaks to the
can facilitate that, the better.”
idea of investing not only in a controller,
This is where you often see across the
but business analysts too. “We can then
procurement space a move to extract
start a journey of creating actionable
the so-called “transactional work” from
insights and making data easier, and more
those categories and domains into
available,” he says. “This is where you
Pro cure ment t ransfor mat ion in t imes of u n cer ta i nt y
get that Centre of Excellence model and this allows us to drive our procurement excellence journey forward where we’ve further invested in expert and transformation roles; people that really focus on how we get to the next maturity level.” “On one hand, they work on setting the strategy but also work side by side with our procurement directors, to implement those strategies and provide a service and look at how we digitise the source to contract process or do risk management for example.” The people, Lombaers continues,
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65
are the real key enablers for the over-
before, what’s worked (and proven unsuc-
all transformation and in order to bring
cessful) and then building on those foun-
those people along (aside from the CoE
dations. “It’s important that you recognise
model approach) newfound impetus is
everything that’s already in place and
given to the notion of change manage-
then recognise that your desire is to make
ment. Change management can be two
it better, or even better than it already is,”
words that unlock a procurement trans-
he says. “You need a balance between
formation, or indeed block it - so getting
speed and alignment. If we need to align
it right is key.
with everybody, the process becomes
Lombaers highlights once again the
slow because that alignment will take
significance of obtaining that deep level
time. You’ve got to find the balance.”
understanding of the business and its culture, reflecting on what has come
Lombaers speaks of sometimes having to push your team a little harder in places
Pro cure ment t ransfor mat ion in t imes of u n cer ta i nt y
“ Businesses are tasked with making critical decisions based on their data and it is essential that this data is as robust and as accurate as it can be to make those decisions.” — N a d i a L aw, Ros s lyn Dat a Technologies
and easing off a little in others, recognising that there is no secret to success in change management and transformation. Once again, Vonkeman’s role as a Controller proves key as he (along with business analysts and experts) are able to connect with the procurement domains, hear about their pain points and then both explain and adapt the strategy. “What it boils down to,” Lombaers adds, “is communication, communication, communication.” Data, as we know, is the key to www.cpostrategy.com
67
storytelling for procurement. Data,
from both a procurement and financial
perhaps more than anything else, speaks
perspective. Air France-KLM partnered
the loudest and a reporting system is
with Rosslyn Data Technologies, a soft-
required to truly enable this conversation.
ware company providing procurement
Air France-KLM, being an airline group,
and master data management solutions in
is not by definition a technology devel-
the Spend Analytics, Supplier Information
oper and therefore it needed to look to
Management, Supplier Performance
the market to find a solution and in turn a
Management and Supplier Contract
partner to enable the data-driven trans-
Management arena. Here, the company
formation. Lombaers acknowledges that
implemented its RAPid Spend (known as
there was a need for the business to “step
MySpend within Air France-KLM) solution.
up” it’s spend analytics reporting capa-
“Businesses are tasked with making
bilities and to classify its spend properly
critical decisions based on their data and
Pro cure ment t ransfor mat ion in t imes of u n cer ta i nt y
it is essential that this data is as robust
processes and cost management.”
and as accurate as it can be to make those
With transformation, no matter the
decisions,” says Nadia Law, Rosslyn Data
size of the company or the scope of the
Technologies. “If you have inaccurate or
journey, change cannot occur overnight.
badly categorised data, the output of your
The journey from where a company is to
procurement initiatives won’t lead you to
where it wants to be is not as simple as
make the right choices. Having a really
moving from a A to B and both Lombaers
clean, enriched data set enables a busi-
and Vonkeman understand this. For them,
ness to categorise their data in a way that
navigating this journey is as much about
is meaningful for them, supporting the
recognising and accepting the time it
identification of procurement initiatives
takes to achieve the key goals
that can improve cost savings, business
as it is about the goals themselves. www.cpostrategy.com
69
Pro cure ment t ransfor mat ion in t imes of u n cer ta i nt y
“ You see in procurement organisations either the early adopters or you see people that are finding it a bit more difficult to embrace the change and so the approach is different for everyone.” — L au ren s Vo n keman , C o ntro l l e r, P ro c ure m e nt , A i r Fran c e - K L M
www.cpostrategy.com
71
Much like establishing a balance between speed and alignment in change management, it’s about establishing a balance between quick wins and successes and the realities of operating in a volatile industry space. “Gaining adoption is a step by step process ultimately,” says Lombaers. “But it’s also important to think about quick wins and creating success stories. You see in procurement organisations either the early adopters or you see people that are finding it a bit more difficult to embrace the change and so the approach is different for everyone.” Vonkeman adds: “You also want to recognise the figures that should be recognised. As the data quality improves and becomes even more enriched and takes procurement to the next level, that helps acceptance. But that’s only part of the story. Those early adopters in the business can really help the other people who are in the second or third wave of adopting because the
of transformation, but are we guilty
truth is: these journeys are hard work.”
of focusing solely on the successes
Despite transformation being
and ignoring the failures? Lombaers,
such a broadly recognized conversa-
like many, is an avid subscriber to the
tion happening all over the world right
thought process of learning more
now, with success stories easy to find,
from the things that don’t happen
there is and perhaps never will be any
compared to the lessons learned
guarantee of success. There is no one
from the things that do.
single way to navigate the complexity
“It’s hugely important to talk about
Pro cure ment t ransfor mat ion in t imes of u n cer ta i nt y
mistakes because if you don’t make any
Ultimately we have to be open enough to
mistakes you’re probably not taking
pick up the concerns and address them
enough risks,” he says. “I think one of the
and that helps us to make the approach
big ones is that we’re probably not, at the
better in the next version.”
beginning, talking enough about the why.
“Not doing so will still see us get there,
Why do we change? We identify the why,
but by really working together in this
but do we talk about it enough? Then of
way we can travel a lot further. It gener-
course there’s biting off more than you
ates sustainability within the journey of
can chew and trying too much too fast.
getting there.” www.cpostrategy.com
73
HCT ’s procurement revolut ion
R PROCUR E MENT V O L U T I O N Mahmoud Al Alawi, HCT Director of Procurement & Contracts, catches up with CPO Strategy, two years after launching a significant procurement transformation...
Written by
Dale Benton
Produced by
Heykel Ouni
www.cpostrategy.com
75
T
he Higher Colleges of
In tandem with HCT 2.0, 2018 saw
Technology, the largest applied
HCT set itself a strategic mission to bring
higher education institution in the
upon a “revolution in procurement”, led
UAE, developed its transformative HCT
by Mahmoud Salem Al Alawi, Director of
2.0 strategic plan (2017-2021) in line with
Procurement and Contracts. When we
the future aspirations and vision of the
spoke in 2019, HCT was already 30% of the
UAE’s wise leadership. Subsequently, this
way through this bold mission, achieved
strategic plan evolved into HCT 4.0, in
through its Annual Procurement Plan in
2019, to further support the international
the first quarter. As 2020 drew to a close it
challenges and changes brought about
proved to be a pivotal year in defining the
by the “Fourth Industrial Revolution.”
future of HCT’s procurement function.
HCT ’s procurement revolut ion
As we speak in 2021, the world has
When we started we had the seeds of a
changed dramatically, thanks to the
strategy for the department. Today, we
further digitalisation of procurement and
have a robust and improved strategy. We
the seismic ramifications of the COVID-19
have a long-term strategy that's aligned
pandemic. So what has this done for the
with our organization and which is linked
procurement revolution within HCT?
to the UAE government strategy, espe-
“The strategy that we put in place has
cially for the education sector. We are
really started to show results,” says Al
further aligning ourselves with the HCT
Alawi. “The pandemic accelerated and
4.0 strategy, where we have created
helped achieve our strategy, especially
Procurement 4.0, as well. We now have a
when we talk about digital transformation.
procurement strategy that's concentrating on people and the organization.” Elsewhere, HCT has invested in training its employees and hiring qualified human capital to create a veracious competency framework. These trainings are delivered through a partnership with the Chartered Institute for Procurement & Supply (CIPS), where HCT continues to leverage the global expertise of the organization in order to achieve a best-in-class procurement function. “We talked about our procurement processes back in 2019 and how we were looking to shorten the process. Well, today I can confirm that we have completely streamlined and re-engineered the whole process, down from two weeks to being able to complete and close a process within one day,” beams Al Alawi. “This isn't just transformation, this is revolution.” www.cpostrategy.com
77
This revolution of procurement extends to HCT’s supplier relationships, something that proved particularly important throughout the COVID-19 pandemic. Here, through enriched supplier relationships, HCT has been able to provide full support to its vendors during some of the most challenging moments, over the last 12 months. As Al Alawi describes, ”they are our partners in success and partners in our journey”. From the start of the pandemic, HCT provided cash flow for its vendors and shortened, or reduced, payment terms; extending the same terms for any SMEs with which it worked. For servicebased vendors, HCT also established special agreements, whereby it could match the salaries and benefits of their employees, so as to ensure the employees’ jobs were secure during difficult and uncertain times. “We never used force majeure. We
revolution in its procurement relation-
preferred to use business continuity,”
ships with external vendors, but also
says Al Alawi. “So, we helped our vendors
in its relationships with internal stake-
and the business with us by supporting
holders. Procurement, as a function, is
them in shipments, revising the deliv-
evolving all over the world and, at HCT,
eries and revising the service scope to
the Procurement Department has grown
be aligned with the situation during the
significantly, developing and maturing
pandemic. We came up with good results.
exponentially to where it is recognized
We have partners who are supporting us
as a vital strategic function. Most notably
more than ever before.”
for Al Alawi, a man who has always recog-
HCT has not only witnessed a HCT ’s procurement revolut ion
nized and valued procurements' true
We showed them the challenges and the procurement process, so that they understand what they should expect as being part of our process when they place a request with us.” “It’s all about the engagement with our internal stakeholders to make sure that they are aligned with the process and to make their lives easier when they create any request.” Another key area of development for both HCT, and indeed procurement, is digitalisation. In 2019, Al Alawi spoke of the need for a new ERP system and dashboard. As HCT looked to increasingly focus on excellence, performance management through KPIs proved key. Here, the COVID-19 pandemic actually helped accelerate this conversation. “We work in a very dynamic organization and a very dynamic country. The decisions here can be made within a worth, he is confidently assured that the
minute. Leadership has a very clear strat-
business sector understands and appre-
egy about where they want to go, where
ciates just how important procurement is
they want to be and so the implementa-
to the institution’s optimal operation.
tion should be done with no time to spare,
“We also understand the business
with good quality. It's a big challenge for
requirements more,” he says. “Believe it
us, as procurement, to match this triangle
or not, in the pandemic, we spent more
- the quality, time, and to give the proper
time with them. Everyone was working
cost,” explains Al Alawi.
from home and so we had more time to
“When the pandemic hit, management
talk, to understand their requirements
needed us to be ready within a week, to
and to really put ourselves in their shoes.
work from home and to support the whole www.cpostrategy.com
79
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business 100%, without any disruption.” Naturally, the Procurement Department
manually until the day they called for the lockdown. So, within a week, we came up
found itself receiving an extensive list
with the solution. We worked hard with
of requirements from internal business
IT, day and night to get this part done
units, essential to maintain a seamless
because this was the most critical part.”
continuity of operations. It needed an
Once this new solution was in place,
ERP system, but doing so within a single
the work was only just beginning for HCT,
week is a challenge that even the greatest
as it needed an ERP system that could
procurement leaders will admit is practi-
handle both internal and external sourc-
cally impossible. But that wasn’t part of Al
ing with vendors. Once again, time was
Alawi, and his team’s, lexicon. Al Alawi and
everything and so it needed to find a solu-
his team were able to source temporary,
tion with a quick implementation period
alternative solutions to support a digi-
and at a price that was fair. It is here
tal transformation remotely. Even so, Al
where HCT entered into a key partner-
Alawi knew this was a short term fix.
ship with Cloudia.
“Very early on we began customizing
Initially, this system was only required
our portal to receive, for example, the
for sourcing and commercial evalua-
technical and commercial pieces through
tion. HCT’s biggest concern was centred
an online portal,” he says. “For compa-
around tenders, and commercial and
nies who had ERPs, it was easier mainly
technical evaluations within the system
because the system was already there
itself to maintain control of the process.
and they could use it. But for us, we were still handling this part of the process
“We told Cloudia what our requirements were and they were more than
“This isn’t just
transformation,
this is revolution”
— M ahmoud Al Alaw i
HCT Director of Procureme nt & C o ntrac ts
www.cpostrategy.com
81
excellent with us in implementing the system. Within two weeks, to a month, we had the system live with the basic functions that we needed,” he says. “But once we went through the system, we pushed it to do more.” This involved solving challenges around its document management systems and, by collaborating with another vendor, HCT was able to create an E-Procurement Committee (EPC). By digitalising each step of the process (sequence, quality control, procurement director and procurement committee secretary) it made for quicker, and more effective, approvals and move towards the authorized signatory stage before final closure. “I'm very proud to say that today, we have the only solution in the UAE government that has end-to-end approval for the Procurement Committee,” beams Al Alawi. “The Procurement Committee is fully automated.” “This database is something that we are very proud of and together with the digital procurement system from Cloudia, our lives are now easier,” he adds. This acceleration of digital procurement, together with the key relationship with Cloudia, has done an incredible amount to add further cachet to what Al Alawi and the Procurement department are doing for HCT. HCT ’s procurement revolut ion
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83
Al Alawi continues: “We are very lucky
effective ERP system because now we
to have Cloudia with us as a partner. After
have everything that we want customized,
we finished the sourcing, we expanded
based on our requirements.”
with them. So, now we have the Annual
One could be forgiven for thinking that,
Procurement Plan completed on the
due to the incredible changes success-
system and instead of planning annually,
fully implemented within HCT, the last
now we have a three year plan.”
few years have been completely hurdle-
“We can see the project, and the bigger
free. However, Al Alawi is the first to
picture. Through a solution, called the
admit that this has not been the easi-
Big Data solution, we link Cloudia with
est of journeys and that procurement
our PR and PO system and our document
transformations are far too complex
management system to create a holis-
to expect a simple journey from A to B.
tic system, which operates as a more
The pandemic has proven to be one of
HCT ’s procurement revolut ion
the biggest unforeseen challenges in
challenges were in the physical nature of
many years; the impact of which we are
procurement and tenders. Due to quaran-
still experiencing to this day. While it
tines and travel restrictions, the tendering
has presented great opportunities for
process was significantly impacted, lead-
procurement to step into the spotlight
ing to delays and businesses having to
and mitigate disruption, the challenges it
shut down entirely.
has thrown up cannot go unnoticed. As Al Alawi has mentioned, HCT had to
“Once again, we utilized our good relationships to work with our end-users to
work in a different way with its vendors
find new vendors,” he says. “Rather than
and suppliers, providing cash support
accepting that we are going to be late
in order to maintain business continuity
in delivering their requirements and we
and significantly altering its procurement
don't provide what they need on time, we
terms to allow for greater flexibility. The
work with them to develop a new list that www.cpostrategy.com
85
we could call Plan B at that time. Now it's our Plan A.” “We came up with a new process to qualify the vendors from the beginning, where we float a tender and once we do the technical evaluation we will consider that technical evaluation as part of the vendor's profile, as a pre-qualification and evaluation for the vendor during the tender,’ he says. “We built a new database of new, pre-qualified vendors, saving both our time and the end-users’ time. Instead of a problem, we came up with an innovative
“I’m very proud to say that today, we have the only solution in the UAE government that has end-toend approval for the Procurement Committee. The Procurement Committee is fully automated” — Mah mo u d A l A lawi H CT D i re c to r of Procu re m e nt & C o ntrac ts
HCT ’s procurement revolut ion
solution that's now our plan A. We do this
“We need to go further. So we have
process with all our tenders. It's now the
reduced the cycle from 120 days to 66
norm instead of a solution for a problem.”
days for the public tender. Today the
Once significant changes are made,
public tender is 66 days, we can get it
and successes achieved, on the procure-
down from anywhere between 40 to 50
ment journey, it is usually the stage
days, and even less. With the system we
where an organization stops and asks:
have control,” he says.
“What next?” As Alawi has noted, with
“It’s about making procurement much
a new ERP system the team is already
easier for the end user. We want to
making strides on its next three-year
make use of a solution, with Cloudia,
plan for procurement to further align with
where users can find their require-
the HCT 4.0 strategy. So what does the
ments ‘on the shelf’ through a digital
immediate future look like for HCT?
store. They purchase their requirements www.cpostrategy.com
87
and, through a seamless experience, it arrives in their canvas or their department, without going through the step-bystep procurement process. Just like the Amazon experience.” Sustainability in the procurement function, and wider supply chain, is an immediate and growing concern for all procurement professionals and organizations, and it’s certainly a key topic for HCT. Sustainable best practice is a topic that hits close to home for Al Alawi, as he takes both a personal and professional interest in exploring what more can be done to leave a lasting, positive impact on the world through procurement and supply chain. As an MCIPS - CMILT (Chartered) Sustainable Procurement Ambassador, Al Alawi is in a position of great influence to help drive sustainable best practices across HCT. “We’re working on creating a truly sustainable procurement function and
we are helping the world in so many ways.
process. We’ve already been work-
It's in our agenda and it's going to be a key
ing closely with our Health and Safety
part of the future transformation for HCT.”
department, as well as aiming to achieve
As the largest applied higher education
ISO and sustainable procurement certifi-
institution in the UAE, HCT’s successful
cation in the near future,” he says.
procurement transformation has a larger
“We are constantly exploring how we
impact on the wider region. As Al Alawi
can look at resourcing and procuring
has noted already, the work that HCT has
wisely and how we can procure green
done around business continuity through-
supplies from vendors to make sure that
out the pandemic has enabled SMEs and
HCT ’s procurement revolut ion
local industry to thrive in a time where force
HCT recently achieved the CIPS
majeure was the more favourable option for
Ethical Procurement and Supply certif-
many procurement professionals all over the
icate and were recognized at the CIPS
world. The organization's key partnership
Middle East and North Africa awards
with CIPS is another pivotal element in the
where we received the 2021 Best
procurement story of the Middle East, where
response to Supply Chain Resilience
HCT uses CIPS to benchmark against
Award. The organization was among
global best practices. Consequently, it has
nine other competitors from the region,
already been recognized as an influential
including Turkey, Kuwait, Bahrain,
procurement model in itself.
Saudi Arabia, and the UAE - a testament www.cpostrategy.com
89
“ We built a new database of new, pre-qualified vendors, saving both our time and the end-users’ time. Instead of a problem, we came up with an innovative solution that’s now our plan A. We do this process with all our tenders. It’s now the norm instead of a solution for a problem” — Ma h m o u d A l Alaw i HCT Di rector of Procurement & Contrac ts
HCT ’s procurement revolut ion
to its excellent work with its vendors during the pandemic. But, as with HCT 4.0 and Procurement 4.0 strategies, the journey doesn't end there. To quote Al Alawi; this has been a journey or revolution, not simply transformation and while these accolades are richly deserved the challenge now is to take procurement further. “Now we are working with CIPS to explore how we benchmark ourselves internationally,” says Al Alawi. “We are participating in the CIPS Excellence in Procurement Awards - a real truly global benchmark.” But it’s not all about the accolades. “Of course we want to get the award, but we want to position ourselves internationally. We want to build our function and to build our standards to be at the very best international standards,” Al Alawi stresses. “So, when we deal with vendors, or with suppliers from Europe, North America, Asia or from Africa, our standards are leading-edge and up there with the best standards around the world, not only within the UAE, or within the government. This, for me, will be a true sign of what procurement can be, and what it is on the road to becoming for HCT.”
www.cpostrategy.com
91
Five KPIs for every procurement professional to consider Fi ve K PIs for ever y p rocurement p rofes s i o n a l to co n s i d er
As procurement continues it’s ascension (long may it continue) what does this mean for the way we define and measure KPIs? Once THE big buzzword of change and now arguably pushed to one side, KPIs are still key (pun intended) to success for any procurement function. So what has happened to the way we measure, report and analyse KPIs during the major evolution of procurement? This list is derived from Kissflow Procurement Cloud
Written by
Dale Benton
Kissflow Pro cu eleven procu rement Cloud’s re organisation ment KPIs that every should keep track of: • Com
pliance rate • Supplier d efect rate • P O and inv oice accuracy • Rate of em ergency purc has es • Supplier le ad time • P O cycle ti me • Vendor av ailability • Cost per in voice and P O • Spend und er manageme nt (S UM) • Procurem e nt R O I a n d b enefits • Price Com petitiveness
www.cpostrategy.com
93
Compliance rate
01 02 03 04 05 Fi ve K PIs for ever y p rocurement p rofes s i o n a l to co n s i d er
Compliance is everything and yet, even now in times of great uncertainty, compliance is something that we still see lacking the proper attention it deserves. Contractual and policy compliance are pivotal to ensure legal security. When your compliance rates dip down, they can very much spike up indirect and maverick spend - which opens a whole host of concerns and negative attention directed towards procurement. Kissflow Procurement Cloud suggests that a foolproof purchasing contract with clearly defined penalties can improve the compliance rate, so what do you need to consider? When thinking about your KPI metrics for compliance rates, think about the ratio of disputed invoices to total invoices and also think about the total difference between the price paid and the price quoted.
www.cpostrategy.com
95
Supplier defect rate
01 02 03 04 05 Fi ve K PIs for ever y p rocurement p rofes s i o n a l to co n s i d er
Your suppliers are, to a certain extent, your lifeblood. The greatest processes and teams mean very little if you dont have the right suppliers. So why wouldn’t you pay close attention to the way you evaluate the individual quality of them? Measuring supplier defect rates and breaking it down based on the defect type will offer actionable insights about a supplier’s trustworthiness. Supplier defect rates are usually measured in defects per million. So here’s a quick way to work out your supplier defect rate: Number of substandard products
÷
Total number of units tested
=
Supplier defect rate
www.cpostrategy.com
97
Rate of emergency purchases
01 02 03 04 05 Fi ve K PIs for ever y p rocurement p rofes s i o n a l to co n s i d er
Perhaps now more than ever before, we have all had to think about our emergency purchases. What are they? All those unplanned orders which are acquired to prevent the shortage of products/ services. This last 12 months during the pandemic has seen a lot more focus on shortages, and what we can do to overcome them and avoid them in the future. The best way to approach this is to take the ratio of emergency purchases together with the total number of purchases over a fixed period of time. So if you were to lower the rate of your emergency orders, you may very well find that you can save costs, improve your procurement plans, significantly reduce any supply risks and ensure continuity.
www.cpostrategy.com
99
Supplier lead time
01 02 03 04 05 Fi ve K PIs for ever y p rocurement p rofes s i o n a l to co n s i d er
Another key thing to consider, alongside your supplier defect rate, is your supplier lead time. The amount of time that elapses between the time a supplier receives an order and the time when the order is shipped can make or break a supplier relationship and your whole procurement situation. Almost as a testament to the significance of your supplier lead time is often measured in days. That’s how quick the assessment needs to be done. Your vendor lead time starts with availability confirmation and ordering and it ends with the delivery of goods. Delivery time
(Goods and receipts delivery)
-
Order time
(PO acceptance)
=
Supplier lead time
www.cpostrategy.com
101
Procurement ROI
01 02 03 04 05 Fi ve K PIs for ever y p rocurement p rofes s i o n a l to co n s i d er
ROI can open doors, and slam them shut. Whether it’s technology, or it’s a new vendor, the ROI needs to be there and it needs to be just right. When it comes to procurement, your ROI is used to determine the profitability and cost-effectiveness of the procurement investment. While not restricted to internal analysis, it is a common note that this metric is best suited for internal analysis. So, here’s the magic KPI equation: Annual cost savings
÷
Annual procurement cost
=
Procurement ROI
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The Next Phase of the Event Industry After the Consumer Electronics Show fiasco should we consider virtual events a failure? What lessons can the event industry learn? Will this digital strategy continue after the coronavirus crisis? Is this the end of physical events? The N ext P h ase of t h e Event indu st r y
Written by Baptiste Boulard, CEO & Co-Founder, Swapcard www.cpostrategy.com
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The event industry has changed more in 12 months than it has within the past decade. Like the retail and television industry, events are finally coming to a digital pivoting point. Virtual events have been the major player over the past year due to COVID-19 restrictions putting an end to in-person events, vVirtual models have shown great potential and even, some say, saved the industry in 2020. But there are challenges that cannot be overcome in a 100% online world. The event industry was for too long focused on the old world. For the past ten years, management has been trying to
Baptiste Boulard, CEO & C o - F o u n d e r, S w a p c a r d
protect their margin at any cost, blocking their digital evolution. Digital has always
usually smaller, more agile and had strong
been considered a threat to their business,
management leading them.
which explains why they did not have the mindset or tools to run virtual events. Large events often belong to large
By the end of 2020 when the effects of COVID-19 on the industry were widely felt, we'd seen two types of mentalities.
corporations that grow through acquiring
The "looking forward" mentality where
events. They are usually decentralized
organizers reacted and adapted quickly,
and the headquarters have limited digi-
and the "looking backwards" mentality
tal team members and a limited budget.
where organizers preferred to pause their
Many people in the event industry have
events until the crisis came to an end.
been doing the same all their life. Without
Unfortunately, nobody knows for how
the vision, skills, agility and budge to pivot
long COVID-19 will continue to halt travel,
to virtual and to adapt their business, it
meetings and face-to-face interaction. We
was an impossible feat.
can only hope that vaccines become more
The companies that were able to go virtual and save their business were The N ext P h ase of t h e Event indu st r y
widely available and that this will allow the world to open back up again shortly.
About Swapcard Swapcard is the leading all-in-one technology platform for virtual, hybrid and in-person events without borders. The event industry is changing. Imagine a platform that offers all the tech you need - registration, engagement, matchmaking, community, and more. A platform that works for all your event formats - virtual, hybrid and in-person. A platform that helps you to build a never-ending community. Swapcard is more than just software - we're a partner in your success. Want to find out how we can help you? Book a demo here. www.cpostrategy.com
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Lessons for event planners We learnt that content is king. The main reason we attend face-to-face events is to network. But the main reason we attend virtual events is to learn and get inspired. A virtual event's success is often determined by the originality, demand for and educational value of its content. Engagement goes hand-in-hand with valuable content. When watching virtual sessions, it's almost too easy for attendees to open up their email, start online shopping or even get up and do the dishes. So keeping them engaged and active is key. This can be done through designing content in an engaging way with tools for the audience to feel like their voices are being heard. Live discussions, Q&A functions, polls and faceto-face meeting opportunities with speakers go a long way to making attendees feel engaged. At virtual events, attendees have unprecedented access to speakers, experts and other high-level industry leaders - people they would never have been able to approach at a physical event are now just the click of a button away. Virtual events are profitable, even more so than their in-person counterparts, when you consider the fact that they require lower overhead fees and higher income potential. High operating costs such as the venue, security, booths, food and beverages and insurance, are removed and the beauty of virtual is that a larger group of attendees and exhibitors from different regions can easily participate. The N ext P h ase of t h e Event indu st r y
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Are virtual events sustainable? Virtual formats are not without challenges.
and use advanced event platforms that
Lower ROI for exhibitors, inefficient use of
provide matchmaking and group meet-
virtual platforms, lack of authentic, seren-
ings between buyers and sellers.
dipitous networking opportunities and
Virtual events and platforms will never
less motivation to buy online are some of
replace face-to-face interactions, and
the obstacles that virtual organizers and
that's not the goal. But while gathering
exhibitors face today.
in-person is impossible, tech can provide
At the beginning of the pivot, many
valuable networking and learning oppor-
organizers rushed to select their virtual
tunities. Exhibitors and attendees just
event platforms and settled for webinar
have to familiarize themselves with the
tools. This left no room for the networking
platform, start reaching out and sign up to
capacity that can be optimized in a more
all the roundtables, meetings and educa-
advanced event software platform and
tional sessions they can. Many platforms
explains the dashed hopes of sponsors
also provide speed networking and online
and exhibitors. SoSo, what can event
roundtable video rooms, where attendees
organizers do to solve this? Now is the
can meet in a serendipitous environment
time for them to benchmark providers
and start building their tribes.
The N ext P h ase of t h e Event indu st r y
The future of the event industry 100% virtual events will start playing a
experience, where attendees and exhib-
different role as hybrid events will kick
itors can interact, share, learn, buy and
off when vaccines become accessible
sell 365 days a year.
and travel returns. Most interactions will
The phase of education and discov-
still take place online as a large number
ery of new exhibitors and innovations will
of attendees and exhibitors will no longer
be done online throughout the year with
travel and be present on-site for the sake
updated content. Business meetings,
of efficiency, cost reduction, and environ-
with the background knowledge of a year
mental awareness.
of research and discussion in the online
The mere term "event" will evolve because it implies a beginning and an end to an occurrence. Perhaps it'll be
platform, will become more prominent in the on-site experience. The event of tomorrow is smaller, more
replaced with a word more descriptive
efficient, tech-centric and focused on
of the year-round community interac-
profitability and efficiency. We'll see less
tions that are starting to grow. The way
visitors, less square metres, but more
our industry interacts is moving from
on-site qualified meetings that should
a temporary occurrence to a timeless
increase the ROI of exhibitors. www.cpostrategy.com
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The right platform can make or break an online, in-person and hybrid experience In a digitally overloaded world, where
remove the barriers that were affecting
attendees have become more demand-
their growth. At Swapcard we believe that
ing about the content they absorb and
a hybrid model of some online and some
how they interact with it, the right platform
in-person meetings with a year-round
is key. The platform is where everything
community platform will be the most
intersects - smooth content production,
profitable and valuable model, offering a
audience interaction, networking, commu-
powerful, unified, data-driven experience.
nity building and sales. Organizers are
We're experiencing an exciting time for
being asked to improve the value proposi-
the event industry. We are undergoing a
tion they are selling to their attendees and
profound transformation that's bringing a
exhibitors, and this can only be done on a
touch of modernity to an ageing industry
platform that meets everyone's needs.
by making it digital-first, data-driven, and
Online events are a great opportunity for event planners to grow, as they The N ext P h ase of t h e Event indu st r y
more focused on the visitor experience and the ROI.
A few virtual events to look out for...
CIPS Global Conference
Procurecon Interactive
Innovation In Asia Pacific 15-16th June 2021
Attend the CIPS Global Conference from the comfort of your own workspace to stay ahead of the curve and ensure your supply chains are fit for the future. Let’s look to rebuild and reshape the profession through strengthening leadership, driving responsible procurement and championing innovation.
Times may be uncertain, but one thing remains true. There is power in people coming together. ProcureCon Interactive is 100% live for you to benchmark with your peers and collaboratively source solutions. Build on your procurement team’s elevated reputation following Covid-19 and capitalise on your seat at the table
The Asia Pacific region leads the way towards a restart following the Covid-19 pandemic, but where now for globalisation and global supply chains? Investigate how a shift to greater regional reliance will impact both indigenous and multinational businesses...
8-9th June 2021
8th June 2021
Join IN:IN to re-evaluate the tools and strategies needed to add business value across 2021 and beyond.
www.cpostrategy.com
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