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BravoSolution UK Open Positions

Breaking Through the Hysteria of Tech Hype: DO NOT EAT!

By Kelly Barner

Over the last few months, have you – like me – found yourself at a complete loss that teens all over the U.S. are making videos of themselves eating laundry detergent tablets? Some are pressured by peers and others are driven forward by the desire to ‘go viral’, but all of them are taking a terrible risk with their health. This awful trend is so hyped from a peer to peer perspective that Rob Gronkowski, a tight end for the New England Patriots, recently made a 20 second video targeted at teens where he says “NO” over and over and finishes on a very clear note: “Do not eat.”

Hype, no matter what kind, allows actual or perceived peer pressure to come between otherwise rational people and their judgement. Hype can lead to euphoria or madness (or both) and is always accompanied by nearly irresistible momentum. Resisting hype can feel like defying gravity – even when doing so is in our best interests.

Join Kelly Barner in a live webinar with Q&A as she discusses Breaking Through the Tech Hype. Click here to learn more and register!

The whole business world is currently under siege by hype driven technology. Examples include blockchain, RPA, machine learning, digital transformation, AI, and cognitive computing. EVERYONE is talking about them. EVERYONE knows they are the future of whatever industry, field, or business process is being discussed. And EVERYONE is positive they will cure all ills and create undefeatable competitive advantage.

Unfortunately, for anyone that resists the hype, this creates a few negative ‘EVERYONE’ perceptions:

  • EVERYONE knows what these technologies are and understands their potential impact,
  • EVERYONE will think less of me if I admit I do not or ask a ‘stupid’ question, and
  • EVERYONE believes they are behind the curve in terms of implementation.

Well, as your mother might have asked you, if EVERYONE is eating laundry detergent tablets, does that mean you should too?

Cutting edge technology is exciting, and it provides opportunities for procurement to apply our skills on behalf of the company in new ways. But focusing on hype alone can only lead to panic and poor choices. Procurement needs to do our research, keep our feet firmly planted on the ground, ask the tough questions, and lead the way forward in a responsible and deliberate manner.

In my first Real World Procurement Series webinar, I will define the hyped technologies listed above, talk about what the potential opportunity/impact is for procurement, and maybe pull in a recent news headline or two to put each topic into context.

Please mark your calendar for March 13th at 4pm GMT – and in the meantime – DO NOT EAT!

What Do I Need to Know About My Suppliers?

By Peter Smith

The role of the procurement professional used to be perceived as focusing principally on our work to choose a supplier and put a contract in place. Even when category management first became the core process for the profession, some twenty years ago, it still tended to focus on researching supply markets, understanding needs and presenting requirements to the market, running competitive processes and negotiating contracts with the chosen suppliers.

Arguably the biggest advance in procurement in the last twenty years has been the greater understanding of what needs to be done after the contract is put in place. Both contract management – ensuring that suppliers deliver what they have contracted to do (and perhaps getting more out of them than the letter of the contract) and supplier management have rightly become seen much more as part of the core procurement role.

Watch Peter Smith’s on-demand webinar and Q&A with Jason Busch as he discusses Supplier Management in the time of CSR and GDPR.

Indeed, we’ve argued before that putting the supplier at the centre of procurement thinking and strategy is a good way to make sure the procurement role is aligned with business success. Colleagues who use the “services” of procurement and work with suppliers every day tend to see those firms as indicators of procurement’s competence (fairly or unfairly)! If suppliers aren’t performing, or risk issues arise, it will often be the procurement team that is blamed in some sense.

One of the key elements of effective supplier management is information – understanding what is needed, collecting the appropriate information, managing and using it in a way that generates benefits. So that’s what we were talking about on February 13th on our Real World Procurement webinar, titled “What Do I Need to Know About My Suppliers?

While this has always been an important topic, one aspect that has added a new dimension to the discussion is GDPR – the general data protection regulation, coming into force this year in Europe. This has raised some tricky questions for organisations and procurement professionals in terms of how they should be working with suppliers who hold data on their behalf, and what information should be held by the buyer. On the 13th, we took a look at GDPR during our session – this wasn’t a “deep dive” but we talked about some of the key principles and what procurement needs to be considering in this important area.

But there are also other types of information of course, from basic factual details through to much more strategic information around corporate social responsibility, or supplier performance, development or innovation. So, on the webinar we were talking about how you might segment suppliers in terms of the information that is needed, and how you can make sure you are collecting what is important and necessary. You can watch the on-demand version of the webinar here.

 

 

Procurement Unplugged Q&A: Delivering Value, Not Just Savings!

During the latest and final webinar in the 2017 BravoSolution Real World Procurement Series “Delivering Value (Not Just Savings!)” Peter Smith, Editor at Spend Matters UK/Europe, defined exactly what “procurement value” means. Peter spent time teaching the audience how to best explain procurement value to senior stakeholders, and demonstrate how procurement actions contribute to the wider success of the organization and its competitive advantage. He also spoke about why every spend category should be considered separately, and what that means for each in terms of value.

Following the webinar, Peter engaged with the audience in a live Q&A session and answered real-world procurement questions, like how to define and measure optimal procurement solutions and their success, and how to determine the number one objective for your procurement organization.

Q: Is there any value in expressing cost reduction in terms of equivalent value? A term finance types can understand.

A: Talking about what we’re doing – what we tend to see as procurement results – and turning them into measurements for the organization. Often, the CFO’s a key person turning it into language they understand and can relate to.

In the 90s, when I was the European procurement director for Dun & Bradstreet, I saw the COO from Dun & Bradstreet present at the CFO’s conference. And rather than saying “We’re going to switch to the D&B deals and save $10 million a year,” she said “So we’re going to save $10 million a year. And as Gartner trades on a PE, profit earnings ratio, of 25 or 30 or something, that converts to an additional $300 million of shareholder value.” And everyone in the room went “Wow. That’s incredible. $300 million shareholder value created by using some D&B procurement deals.” And for some, it was like the light bulb moment. I thought then that there are different ways of presenting what we do and some of them are a lot more powerful than how we normally do it in procurement.

Another way of doing it is, how much more revenue will the organization have to get to equate to the amount saved?I’m very interested in how we can get better at expressing the risk management side of what we do in procurement. We need to think about getting better at expressing the benefits of risk management in a more quantified way. I think sometimes, looking at trying to quantify the current supply chain risk picture, what’s the probably of certain things happening? What would be the cost if they did happen?

One final quick example. There was some work that had been done in our national health service at a big hospital. Procurement had done some really good work and saved some money, and taken some cost out. A man stood up at a conference and he said “We saved two million dollars this year, and that translates into that we can do an additional 73 heart operations. And that probably means we saved 41 lives.” And you thought, “wow, that’s a very powerful way of expressing what it is that procurement does.”

Q: In a hybrid value proposition, price, service and risk, how do you define and measure the optimal solution?

A: I think there’s a parallel there with how we evaluate tenders. If you are in an organization that has a relatively formal way of evaluating tenders, it’s evaluated in a complex, but structured manner. You have different evaluation criteria, which could be cost, service, risk, and you set weightings for these factors.

You can look at that and say “This company offers a million dollars and we score their services nine out of ten, and we score the risk as whatever. And here’s another company that’s offering $800,000, but their service is this.” And there are ways of combining that to come up with an overall score that tells you which has won the contract. So I think you can apply something similar here.

There are ways of trying to get people to quantify by somebody saying “Well, quality’s more important than price to me.” How much more important is it? If you could have 20% less quality for half the price, would you take it?

It’s not an easy thing to do, but I think you can start to work with your CFO or your stakeholders. Some of this comes back again to the organization’s objective to say “Are we most concerned about cost reduction? Are we prepared to take a higher risk to get that lower price? Or are we more interested in service and we want to put more weighting on that?” I think the answer’s probably something around decision theory and decision analysis.

Q: Isn’t it the job of the budget holders to develop the specification, and then procurement buys against that at the best possible price? Lowest cost, or cost reduction, is really the number one objective for procurement?

A:. To me, there’s a couple of issues here. The first is that for many spend categories, I would have expected my category managers, like when I was a CPO, to be experts in that category and experts in what’s happening in the market. And certainly in some areas, more so than the budget holder. If I take management consulting, and it’s a category I wrote a book about a few years ago, most budget holders engage consultants occasionally. You can’t expect them to be experts in that market. If I’m in an organization with a big consulting spend, I expect my professional services category manager to be the expert and to know who the new companies are and to know who’s performing well on transformation, who’s very good on IT implementation, and so on.

I don’t think it’s simply a question of taking a spec and going out and beating suppliers over the head. I think it’s about working with the budget holder to help them develop an appropriate specification, be able to say “Well, if that’s really what you want, you’re going to really restrict the market. If you can open it up a bit, we can bring some other suppliers into the tender process,” and so on.

My second argument against that approach is that it sort of works if you’re buying skim milk powder, which has a very set, definite specification. As soon as you’re buying complex services, there is always flex in the specification once you get into the negotiation and contracting process. There’s always some movement, there’s always a case of the supplier saying “Well, okay. If you want it 20% cheaper, that’s fine. But I can only do that if we change this, or we change that deliverable a bit. Or we downgrade that a little bit.” You’re rarely negotiating around an absolutely fixed spec once you get into more complex products or services, actually.

There’s also the question of confidence. If I put out a spec for some marketing work and I’m getting bids around $100,000, and somebody comes in and says “Hello, this is John Smith from Arkansas. I can do it for $73.” Do we give John Smith the business? Because that’s sort of how it goes if I’m just price focused. No, we look into who is John Smith? What’s he done before? What’s his track record? Is his company sound? Does he know what he’s talking about? It’s not as simple as price.

Q: Isn’t it really difficult to measure the return from marketing spend and even harder for something like consulting?

A: Yes, it is. It amazes me though that some firms throw huge amounts of money at marketing in areas like digital media now, and adverts on YouTube and Google. They have no idea whether it’s real people watching them, or whether their adverts are going out next to horrible videos. I think that’s a failure not particularly the procurement people, but the whole organization.

It’s not easy to measure return on marketing spend. If you really have no idea what it is, then perhaps you shouldn’t be spending the money at all, or you should be going back to zero-based budgeting.

Consulting is probably even harder to measure. Part of the category management process of consulting is that it has to go through a business case process. Even if a budget holder has a budget to spend on consulting, that doesn’t mean they can do what they want with it. Part of the procurement role is to work with the budget holder to demonstrate why that consulting assignment is going to bring value. And if the budget holder says “I think I want to spend a million on this assignment,” then there’s a number of questions. What’s the value? What are the outcomes, the outputs going to be? Can we see that potentially that is worth more than a million?

Then, the job of procurement is to say “Well, okay. Does it have to be a million? Can we get those ad puts for less than a million? Or, if we are going to spend a million, can we get more from it?” If you really have no idea what return you’re getting on a spend, maybe you need to do a bit of research before you throw your money at it.

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This Q&A session has been edited and condensed from the final live session of BravoSolution’s 2017 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 “Delivering Value (Not Just Savings!)” click here.

Procurement Unplugged Q&A: Procurement Planning for 2018

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.

Don’t Think Procurement Plays a Role in Defending the Corporate Brand? Think Again.

By Andrea Brody, Chief Marketing Officer at BravoSolution

If procurement leaders don’t realize they have significant responsibility to protect the corporate brand, they should watch the latest documentary from a German broadcasting station which uncovered cruel labor and animal welfare practices in the making of major ingredients in Haribo gummy bears. The investigation is called Markencheck which literally means Brand Check! You can’t get any more real about the role procurement has in protecting the company’s brand equity.

In the case of confectionary company Haribo, the German documentary called attention to the company’s use of slave labor in Brazil. Turns out that gelatin and carnauba wax, two key components of the company’s famous gummy bears, are sourced from areas involving inhumane working conditions and animal abuse.

Haribo claims to not have known about the reliance on slave labor, but the harsh reality is that unethical practices can exist in any supply chain, even those of large, well-known brands. By nature, multinationals have more supply chain complexity to manage and are less connected to original supply sources, making them more prone to sustainability issues. Household brands have a lot to lose when this happens – the negative effect of supplier scandals can impact everything from sales and stock price to PR and consumer trust. With millennials’ purchasing power increasing, and their rising demands for sustainable and ethical manufacturing practices from the brands they do business with, companies can ill afford even one mishap.

Prevention pays: Procurement’s role

Without a holistic, integrated procurement strategy that offers extensive visibility into the supply base, anticipating and mitigating unethical practices is very challenging.

Empowering suppliers, and setting them up for success, is a critical step for risk mitigation. Use tools that put supply partners at the center of the procurement landscape and make it easy for the supply chain team to gather insight into suppliers’ ethics, labor practices, business operations, and working conditions. This leads to a holistic view of performance and allows procurement to anticipate issues before they occur. The collaborative and transparent relationship also gives suppliers the edge they need to improve practices over time.

Procurement also needs to consider supplier sustainability and CSR practices when selecting suppliers. This sets the stage for future dealings and ensures both buyers and suppliers are on the same page when it comes to ethical standards. Confirming that prospective supply partners have the required legal, financial and environmental documentation in place to deliver products and services in a specific category may seem like a simple box to check during the sourcing process, but it truly goes a long way. Waiting until a formal relationship exists to talk about sustainability expectations makes it difficult to retroactively set parameters and ensure alignment. The bottom-line: to reduce the risk of CSR surprises and scandals, sustainability needs to be a key criterion when sourcing and evaluating bids.

No company wants to find out through the media or a documentary that their operations are a breeding ground for forced labor.

From the outside, it appears Haribo is taking the right steps. The company is launching an investigation into the matter and conducting an audit of its suppliers and their operations to eradicate forced labour and other issues. The takeaway for procurement teams: you are the defenders of the corporate brand and supplier relationship management must be a critical focus. The right technological solution can provide the visibility, allowing senior level decision-makers access to actionable information quickly. It can help eliminate risk and provide truly global views of supply side relationships through proper on boarding, qualification and segmentation capabilities.