­

BravoSolution UK Open Positions

CPG Manufacturer Achieves 5 to 10% Savings Across Multinational Organization

After a major reorganization, this CPG manufacturer and Fortune 500 company recognized that further drastic changes were required to better manage spend and drive purchasing efficiencies.

This company, like so many other massive, publicly-held multinational organizations, relied exclusively on manual systems and Excel spreadsheets, which resulted in a significant lack of accurate, real-time consistent data, office to office, country to country and continent to continent. Their management and purchasing teams recognized the impact of everything from cost-effective, strategic sourcing to team productivity and transparency. Yet, they also faced budgetary constraints, users’ comfort with the legacy systems, and concerns regarding implementation, training and acceptance.

“We knew change was required but there was invariably resistance to what’s new and unfamiliar,” said the Vice President of Procurement. “However, we knew firsthand just how difficult it is to leverage your team’s experience and expertise when they don’t have the data required for deep analysis and the subsequent decision making.”

BravoSolution optimized purchasing logistics with automated reports following all invitations to tender while reducing paper flow. Such optimization included the automation of previously manual
administrative tasks, which frees up employees to focus on strategic purchasing and sourcing. The advanced sourcing optimization engine, which is recognized as one of the industry’s most robust, allows buyers to compare the hundreds of vendors bidding on tens of thousands of items. This provides the information they need to negotiate through convenient dashboards, and increases the number of quality bids which ultimately allows them to optimize award allocations.

“As much as pricing matters, more than ever before, industries around the world are looking beyond cost because the higher the impact of the product or service on your business, the more collaborative you want to be,” stated the VP of Procurement.

In the long run, there will be a return on their investment due to savings on products and services, as well as a much more effective use of employees’ value-added skills.

DOWNLOAD HERE

The Generation Game: Three Generations of Supplier Management

By Sarah Kingdom-Evans

Whilst recently attending a CPO procurement event, I took a look at the attendees, reviewed the event agenda and direction of discussion… yes the agenda promised to look at a myriad of topics such as Procurement Transformation, Analytics, Stakeholder Engagement, P2P, Driving Excellence, Risk, How tech is shaping our world and even IOT… (quite the list, I think you will agree).  Whilst all of the aforementioned subjects are both important and worthy of continued discussion (possibly over several days)…. the direction during panel discussions and one-to-one sessions appeared to focus primarily upon Suppliers, Collaboration and Relationships.

Could it be that the one thing that we are struggling with is how we truly achieve a collaborative approach within our supply chain?

In my role, I meet many customers and prospects, and there is a slide that I show that either stimulates much discussion or starts the thought process of ‘where are we’?

As you can see, the slide demonstrates the current phases of many procurement teams, ranging from 1.0 (tactical, conventional purchasing) to 4.0 (strategic, value managed procurement).  Each person and phase will mention Suppliers, with those at stage 1.0 to 2.0 nodding their head to supplier management, however those at 3.0 onwards are aiming to unlock new value through relationships… they never assume that today is good enough, no matter where they are on the procurement journey.

During the previously mentioned event there were discussions around the 3 generations of supplier management, which led me to examine the generation gaps that we are seeing today and to wonder if these gaps are the reason that many organisations still operate in a traditional nature?

First Generation Supplier Management, can be defined as the basic on-boarding of suppliers with minimal information apart from contact details, possibly some category identification and the ability to register. In theory a database of people that want to sell you something, and in reality nothing new…almost a digital rolodex, albeit one with reporting, an audit trail and accessibility.

When we move into the Second Generation, we can review the slide below… Yes, we should be applying an element of Supplier Management to our supply chain, although typically only strategic, high-value suppliers are identified as worth the effort.  Organisations should be, as a minimum, demanding categorisation, along with the identification of risk, analysis of previous performance trends and applying segmentation. Often, this is a historic look at what has happened in the previous financial year, rather than an updated, descriptive understanding of the impact of decisions and issues, and crucially the potential corrective actions needed.  Perhaps we are not allowing our hard work prior to contract award to be fulfilled? Suppliers could potentially reduce the service level standards agreed at contract, therefore applying the rule ‘What gets measured gets done’ should be constant.

Many organisations are aiming to be at the Second Generation stage, with of course, many achieving it, however this sometimes still positions those organisations in the traditional ‘What happened’ area with a collection of data coupled with a ‘them and us’ attitude, restricting the usefulness of the information and the effectiveness of any actions. Horses and stable doors come to mind….

Third Generation supplier management with combined development, collaboration and, where possible or necessary, vertically integrated supply chains supported by guided, predictive or even prescriptive analytics should continue to enhance our businesses by understanding what is happening now, or very recently.  Yet not everyone can be Apple, with neither the resources or opportunity to vertically integrate (one could argue that unless you are at risk of supply issues or increasing costs why would you?).

How  about the businesses that are less able to integrate or where the balance of power is not equal?  In most supply chains the balance of power is often held by one side.  Is it almost impossible to truly collaborate with a supplier that fundamentally wants to make an extortionate profit from you?  Yet if you remove your commercial attractiveness, will you get any suppliers at all?

I appear to have asked more questions than I have answered, which leads me to conclude that yes, we are struggling to truly achieve a collaborative approach within our supply chain?

So should we think differently and accept that a Buyer-Supplier relationship will typically have an imbalance, either way, depending upon many factors.  Is it more appropriate that as buying organisations we work to improve what we can, prioritising fundamentals such as paying our bills on time and realistically managing our expectations underpinned with exemplary communication.  As in any relationship, knowing what the other party is thinking or experiencing can mitigate many risks….but also telling our supply chain what would make things better and potentially investing with them to help achieve it. As suppliers, delivering what was agreed at the negotiation and contract award stage is obvious (yet often missed), and to mirror the rule for buyers, getting the invoicing right, understanding the client’s needs and yes, listening and understanding is essential.

The third and possibly fourth generation of procurement relationships will strive toward Value Management, enhanced by predictive  and prescriptive analytics to foresee issues and highlight inconsistencies.  We may even see Blockchain driven value chains – but that is another discussion for another day, or possibly a discussion topic at the next procurement event we attend…

 

Scottish Councils

South Ayrshire Council (SAC) and East Ayrshire Council (EAC) are two local authorities lying in the southwestern corner of Scotland. Each operates a centralised procurement function, responsible for supervising the strategic spend of up to £150 million annually on a wide range of goods, services and works, to deliver best value to the local community. SAC delivers services to a population of about 113,000 residents, and employs about 6,000 people to make sure that is done well. East Ayrshire is a diverse area covering some 490 square miles with a population of 122,440 spread over both urban and rural communities. Both procurement functions aim to promote robust, compliant and transparent procurement processes in line with the objectives of Scottish Government, Scotland Excel, and Crown Commercial Service.

“For East Ayrshire Council, the system has completely transformed how we work, giving us a transparent and formalised online contract management database which allows on- demand, searchable access to all key contract data by contract administrators and managers, other internal users/stakeholders and external collaborators (anytime, anywhere, any device). The automation has streamlined the Council’s contract management and supplier performance processes and as such we feel that this has increased our business efficiency and improved internal and third-party collaboration by reducing operating expenses.”

The shared process has now produced three quarters’ worth of data, and the councils are starting to build up a very useful picture of supplier performance. They can see whether the contracts are doing what they are supposed to be doing, and use the data to demonstrate where they are getting real value for money. It bodes well for more reciprocal work on contracts going forward.

“At East Ayrshire, we have also taken the time to conduct one-to-one training with our suppliers on the system in order to provide them visibility of their own contract information eg: minutes of performance meetings, price schedules, variation orders and various other contractual documents, thus reducing the need to duplicate work and information eg: copies of contract documentation, and so on,”.

Download the full case study to discover how Scottish Councils are using BravoAdvantage  to take a collaborative approach to contract and supplier management.

 

CLICK HERE TO DOWNLOAD

17 & 18 October | BravoConnect: 2017 Global Customer Conference

17 & 18 October | Madrid, Spain

Discover the future direction of procurement while gaining insights from global procurement colleagues and industry thought leaders. Make plans to attend BravoConnect 2017 to transform your procure-to-pay initiatives.

Register Today

The Five SRM Killers

By David Atkinson

Barely a week goes by without yet another story in the press of failures of suppliers to provide goods and services to a standard set out in the contract. We also hear of supermarkets, defence contractors, building firms, public sector purchasers who fall below the standard of expected performance and who ‘took their eye off the ball’, sometimes with serious consequences for customers and shareholders.

Fortunately, there are plenty of CPOs who have learned from experience (or the experience of others) that supplier relationship management has become a key component of category management; one that’s increasingly recognised as essential if the organisation aims to secure the value it’s contracted for, or seek to gain additional value from working collaboratively with suppliers and providers.

Nevertheless, there are many who are struggling in making good SRM practice ‘stick’. Honest attempts are made; only to see practice fall away as enthusiasm drops and stakeholder colleagues lose interest and quietly withdraw their support.

So, what gets in the way of effective supplier relationship management?

There are undoubtedly a number of reasons why some organisations particularly struggle with implementing and embedding SRM, but I think there are five major reasons – and these I’ve called the ‘five SRM killers’.

Here more from David Atkinson on the topic of Supplier Relationship and Value Management: The Five Programme Killers and How to Overcome Them in his live webinar and Q&A. Register now!

Firstly, there’s the absence of a coherent, joined-up strategy. There are a lot of good ideas being applied, but what works in one sector may not be successful in another. Those SRM pioneers have experimented and honed their practice over many years to create a way of working unique to their circumstance. That’s hard to copy.

Secondly, CPOs have the challenge of creating a team-working ethos, with real commitment from stakeholders and senior executives to allocate time and resources to making SRM work. Experts from non-procurement functions routinely engage with suppliers and providers – they need them to play their part in contract and performance management. And that’s a tough ask in many organisations.

Thirdly, they don’t do SRM just for the fun of it (or even to create harmonious relationships) – they do SRM because supplier value is a key component in their success. Numbers matter. CPOs must get a grip on the tracking of benefits that come from SRM. What SRM practices work with one supplier, won’t necessarily work with another, and it’s difficult to predict the outcome, so setting arbitrary savings targets is unwise.

I will cover the remaining two ‘SRM Killer’s’ during the forthcoming webinar.

All five of these ‘killers’ contribute to the sense of disappointment and difficulty in making good SRM practice sustained and delivering results. Stakeholders and seniors all to frequently quietly withdraw their support, and procurement’s focus returns to sourcing and negotiation. Opportunities to increase value and secure innovation go begging.

But what if there was a way to get SRM right? I believe there are two essential ingredients for success – a coherent strategy, and a proven method that can be consistently applied

Starting with ‘strategy’, my preferred method is to build it systematically through the five components of strategy, firstly, a (1) overarching intention (or purpose) – what the organisation is seeking to achieve, then through the consideration of (2) stakeholder needs, (3) financial performance, (4) SRM practice and methods, and finally (5) skills, organisation set-up, and systems support. So far, so familiar, you might think, but Bain & Co identified that only 9% of companies achieved the goals stated in their documented strategies; so something is going wrong between the idea and the execution.

The key in this method of developing strategy is the focus on systematically identifying the cause and effect connections between each of the five components mentioned above. In other words, good strategists don’t rush into action before thinking about what is necessary and sufficient to assure success.

Then there is the actual practice of SRM. In other words, how do you do it? What is the process?

CPOs really need to think about process, and the activities within that process that the team must excel at. Leading SRM practitioners are clear about what the day job involves, and they allocate resources and develop talent accordingly.

Space doesn’t allow a detailed discussion on the process, but I thought it important to give readers a clue about what a systematic and repeatable SRM method looks like.

Such a method is in three phases:

  • SRM programme enablers – the bedrock of any SRM programme
  • Developing the relationship strategy – deciding what to do
  • Supplier Engagement – implementing the relationship strategy

The enablers are a SRM programme & phased implementation plan, supply base segmentation, the SRM process (and its tools & templates), performance indicators and a method of tracking benefits (CPOs need to keep score to ensure leaders and stakeholders stay on board); and finally, organisational negotiating competence to ensure everyone has enough commercial nous to enable them to interface effectively with suppliers.

Developing supplier-specific relationships strategies, and supplier engagement soon follow. More on this in the forthcoming webinar.

Embedding SRM is not an easy journey for most organisations, despite its obvious attraction as a practice. It takes clarity of purpose, a robust, joined-up strategy, and the enthusiastic application of a practical method for releasing more value from the organisation’s most important supplier relationships.