During the latest BravoSolution Real World Procurement Series webinar focused on “Procurement Planning for 2018,” Guy Allen, Managing Director at Real World Sourcing, initiated ideas which all procurement professionals need to start thinking about for approaching the new year. Guy provided recommendations on how to assess your past year’s results and how to advance them into tangible goals for 2018 procurement initiatives. He also spoke about how developing a commitment process can drive engagement cross-functionally throughout an organisation, while also identifying and driving support for ground-breaking outcomes.

After the webinar, Guy engaged with the audience in a live Q&A session and answered real-world questions, like how Brexit and other global events will impact procurement in 2018, and how old-school and new-school techniques can help advance your procurement planning.

Q: How deeply involved should procurement be in the budget planning process for the organisation?

A: I think it’s a mixed answer. You want to work closely with the finance department. Whether I’d encourage the finance department to impose a 5% reduction in budgets with the instruction to use procurement to achieve that, that’s a difficult call because I think you could well be making yourself an enemy. But I think understanding how the budget process works and responding to the challenges that come out of that makes a lot of sense.

Q: With reference to Brexit, do you think business leaders across Europe will put pressure on politicians to ensure a deal gets done?

A: I think they will definitely put pressure on the politicians. But unfortunately, the politicians have other agendas, too. I’m sure they have an economic agenda, but they also need to demonstrate that leaving the EU is a painful process. I don’t think there’s any guarantee that a good deal will get done allowing free trade between the UK and the rest of the EU. There’s no guarantee at all.

Q: What is your advice for a Small Medium Enterprise (SME) on which procurement methods to adopt?

A: To me, SME implies that you have limited resources. The first thing you need to do is segment your categories, suppliers, stakeholders and your activities. If you have a small procurement department in a small company, what is that company’s key objectives? Because they probably can’t cope with as much turmoil as a large organisation. And you probably have limited resources so where are you going to have the biggest impact on what your SME needs to achieve? That’s where I’d focus.

From there, you drive the procurement methodology you want to adopt. If it’s cost savings, running four really successful e-options on materials that are really important to your company could have a huge impact. Think about what your SME needs, think about the limited resources you have, and apply what is going to have the biggest impact on what your SME needs to achieve.

Q: What is your view on the impact of the recent interest rate hike by the Bank of England and its impact on the UK export business?

A: It was well publicised that it was coming. It’s gone up from a quarter percent to a half percent, so it obviously had an impact on the exchange rate – that will have an effect on imports as well. You need to think about what you need to do, and what your contingency would be. If it’s key to securing supply at a certain price, maybe you need to forward buy or secure contract for the price. Again, I think you need to think about it, but it’s just another level of uncertainty.

Q: What is the impact of Brexit on Africa in terms of procurement?

A: A bad Brexit, from a UK perspective, will have the UK seeking other markets across the globe and there may be opportunities for Africa and other continents to either sell goods in the UK, or secure supply. So, for Africa and other places, Australia, etc., it may well be that a bad Brexit is good for them.

What it will mean, though? Of course, we’ll have even a longer period of uncertainty in terms of the UK than most people they deal with. But there is a scenario that you could paint that says, “a bad Brexit will be bad for the UK in the short term”, but actually opens up bigger opportunities in the long term. I don’t know if that’s true or not. I’m not trying to tell you that Brexit is a good thing, but I certainly could paint that scenario.

Q: What are the primary elements that need to be included in procurement planning?

A: I would say to use planning to achieve the ends in your function, or for you personally. If you want to drive toward deeper integration or involvement in capital projects, for example, make it a requirement that you’re involved in the capital approval process. And, make it a requirement that procurement has to sign off on only capital proposals. Think about what you want out of the plan because it is an opportunity for you to have a spec change, particularly in these uncertain times.

Think about what might be a burden – that’s the planning process – and turn it to your advantage. What is it you want out of it? Do you want more training for your staff? Have you not had any training for the last five years in procurement? And maybe you should put that in the plan. That’s what I would suggest.

Q: Isn’t printing charts and putting them on the wall a bit old-school?

A: Well it is, but that doesn’t make it wrong. It’s not to say that there aren’t other ways. But if you just leave your targets and their achievement on a dashboard on your desktop, you don’t know that people will look at them. You have a huge advantage of putting your printed chart up by the copy machine, or the notice board by the printer; people congregate there and it will encourage discussion. This makes it a much more social, shared set of targets than an individual looking at a website. So, I think it’s good; I think it gets discussed. I think as a leader, if you have your meetings near those notice boards, you can point to them. I think sometimes, some of the old school stuff is still worth doing.

Q: How is artificial intelligence (AI) having an impact on traditional procurement and typical buyer-supplier relationships? Is this something you should consider in 2018 planning, or is that quite further in the future?

A: I think all these things like AI are worthwhile. What we need to do is to use them to automate the routine and the things that do not make a fundamental difference to your business. But in the end, I feel that business gets done by people. Using the technology to do the mundane and routine stuff will allow you time to use your human intellect and human relationship-building on other areas that are important.

This Q&A session has been edited and condensed from the latest session in BravoSolution’s Real World Procurement Series, an established international series of online briefings designed specifically for procurement professionals, delivered by real-world experts. To listen to the full presentation on “Procurement Planning for 2018” click here.