CPOstrategy - Issue 24

I s s ue 24 • w w w.c p o strate g y.co m

Procurement for the people

4

principles CISOs should adopt

Procurement as a growth engine

Procurement with purpose

— W illem Mutsaerts, Chief Procurement & Sustainability Officer, Givaudan

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Welcome to issue 24 of CPOstrategy In our last issue we spoke of the role procurement could and should play in enabling positive change for the world around us. Our cover star this issue needs not worry about the could, or the should, he sits in a position that allows him to define the sustainable best practice through procurement action.

Willem Mutsaerts is both the CPO and CSO of Givaudan, a global industry leader creating game-changing innovation in food and beverages, and inspiring creations in the world of scent and beauty. The duality of his role is quite unique and makes for a fascinating discussion as to how procurement makes all the difference for Givaudan’s sustainable ambition.

Will also dive deep into Procurement Leaders’ latest report Procurement as a Growth Engine (partnered by Ivalua), which explores how procurement can bring new opportunities for growth, as forward-thinking business leaders become increasingly aware of the huge potential that exists in the upstream supply base.

Elsewhere, we move away from what procurement can do in the private sector to what it can do for the local communities of the world, specifically, procurement in West Mercia Police.

We peek behind the curtain of a major procurement transformation that will see the local UK police force empower its officers to protect and serve their local communities.

EDITOR IN CHIEF Andrew Woods

EDITOR Dale Benton

CONTRIBUTING EDITOR Nell Walker Kevin Davies

MARKETING MANAGER Tracey Harris

SOCIAL MEDIA MANAGER Sally Bellis

CREATIVE LEAD Mitchell Park

GRAPHIC DESIGNER Dhruti Vithani

VP GLOBAL FINTECH & INSURTECH Alex Page

VP TECHNOLOGY Andy Lloyd Craig Daniels

VP PROCUREMENT

There are also fascinating insights from Lance Younger, Dr Elouise Epstein and many many more..

Heykel Ouni Greg Churchill Richard Deane

Enjoy the issue

PRESIDENT & CEO Kiron Chavda

Dale Benton, Editor content@b2e-media.com

Contents

Procurement with purpose

4 principles CISOs should adopt to protect the Supply Chain

Procurement for the people

06

28

36

Procurement as a growth engine

In conversation with Lance Younger and Dr. Elouise Epstein

How procurement will prove key to restoring business growth

56

66

84

www.cpostrategy.com

5

Procurement with purpose How procurement is critical in allowing Givaudan to be a force for good while leaving a lasting positive impact on the world around us...

Written by

Dale Benton

Produced by

Heykel Ouni

Pro cure ment wit h p ur p ose

www.cpostrategy.com

7

B

y its own definition,

“Procurement organisations

Givaudan is committed

have proven that their contri-

to growth, with purpose.

bution to company growth is

A global industry leader creat-

paramount,” explains Willem

ing game-changing innovation in

Mutsaerts, CPO and CSO of

food and beverages, and inspiring

Givaudan. “They’ve also proven

creations in the world of scent

that involving them early in the

and beauty, Givaudan’s herit-

product development cycle is crit-

age stretches back over 250

ical – as a business with custom-

years. The company has a long

ers at its core, we have a vital role

history of creating and innovat-

to play here as we grow together.”

ing scents and tastes, and acting responsibly.

As a company driving purpose-

“Over the past few years, sustainability has become increasingly important for

led, long-term growth, Givaudan’s

Givaudan with clear and bold

intention is to increase its positive

company objectives. It is fully

impact on the world by innovating

embedded in our corporate strat-

sustainable solutions while show-

egy and company purpose.”

ing its love for nature and leading

One of the first things notice-

the way to improve happiness and

able about Mutsaerts' role is

health for people.

its duality. Mutsaerts sits at the

Procurement, it goes without

executive table on behalf of both

saying given its position in the

the procurement function and

broader supply chain ecosys-

sustainability of the organisation.

tem, plays a pivotal role in this and

From this position, he can ensure

while sustainability is not exactly

that procurement truly influ-

a new topic for the procurement

ences the company’s strategic

professionals of the world, in

decisions while also being able

recent years it most certainly

to work with suppliers on their

has risen to the forefront of busi-

sustainability best practices and

ness strategy.

drive real lasting change.

Pro cure ment wit h p ur p ose

Willem Mutsaerts Chief Procurement & Sustainability Officer at Givaudan Willem Mutsaerts joined Givaudan in 1989, initially with responsibility for sales in Benelux. He moved on to become Regional Account Manager for the APAC region in Singapore before being appointed Head of Global Purchasing for Fragrances. In 2001, he took commercial responsibility for Fragrance consumer products in the EAME region, and in 2007 was appointed Head of Global Operations Fragrances.

Willem was appointed Head of Global Procurement and a member of the Executive Committee in October 2015. He took on the additional responsibility of head of Givaudan’s Sustainability programme as of March 2017.

Willem has a degree in international marketing, and is the holder of an MBA obtained at Golden Gate University in Singapore, and postgraduate certified in Sustainable Business by the University of Cambridge.

www.cpostrategy.com

9

www.cpostrategy.com

11

Given the dual nature of his role, Mutsaerts’ represents something of an exception in the procurement space. “I often go to global external or sustainability meetings where people envy the positioning of procurement and sustainability at Givaudan as others sometimes depend on the chief financial officer to make a decision or they must work with the global supply chain manager to influence change," he says.

“In my case, I have overall responsibility. Being able to see the manoeuvring and transparency on everything and being able to set the priorities and decide on that in line with the executive committee strategy is a great advantage for a company to progress and accelerate decision making. This makes a lot of sense as everything we buy (Scope 3) represents approximately 85% of our total GHG impact. So there is a clear natural overlap.”

As Willem has already noted, doing business in a more sustainable way is at the heart of the company’s purpose.

Much of this is being increasingly driven by a customer base which has access to more information about an organisation’s carbon footprint and sustainable best practice than ever before. So what about the how? How is Givaudan driving sustainable best practice across its entire Pro cure ment wit h p ur p ose

“ Collaboration is essential in delivering on our bold ambitions and a transparent dialogue with our suppliers is vital to ensuring the long-term sustainability of our supply chain” — Wi llem M u t s aer t s Chief P ro c ure m e nt & Sustai n abi l i ty Office r at G i vaudan

operation and embedding it within its global supply chain for direct and indirect materials and services?

By 2030, Givaudan will look to have cut carbon emissions across all of its operations by 70%, supply chain emissions by 20%, replacing single-use plastics with eco-friendly alternatives across its sites and operations. By 2050 Givaudan will be a climate positive business.

Focusing on the here and now, Givaudan recently introduced its Sourcing4Good programme which has been co-created with customers, specialists and internal stakeholders. “It represents a strengthening of our work in responsible sourcing as we continue to deliver on our ambitious goal to source all materials and services in a way that protects people and the environment by 2030,” he explains.

“Sourcing4Good is an important www.cpostrategy.com

13

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step-change in our approach as we strive to be a force for good and create for happier, healthier lives with love for nature. It is strongly tied to our purpose goals and bold ambitions to become a B Corp certified company in the years to come. As the first in the industry to have a published Responsible Sourcing policy, we have always shown leadership in this area.”

Elsewhere, Givaudan has redefined how it works with its supplier base in order to standardise sustainable best practices throughout its entire supply chain ecosystem. Through a combination of a dedicated sustainability team working on its scope 3 roadmap together with procurement, Givaudan has trained its buyers to better understand what's at stake as well as setting defined sustainability objectives supported by a global Vendor Quality Organisation.

“Since recently, we also work with organisations like Together for Sustainability (TfS); a global sector supply chain initiative,” adds Mutsaerts.

“Collaboration is essential in delivering on our bold ambitions and a transparent dialogue with our suppliers is vital to ensuring the long-term sustainability of our supply chain.

“As we take the next step in our responsible sourcing journey with the launch of www.cpostrategy.com

15

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our new Sourcing4Good programme, the

programme where for selected supply

additional knowledge and insight our TfS

chains Givaudan has “feet on the ground”

membership will bring will be invaluable in

to assure best practice and to protect the

helping ensure we can continue to accel-

environment and the communities.

erate our progress as we grow together with our customers and suppliers.”

“As the world changes, so does procurement,” says Mutsaerts.

So it’s clear just how integral procurement and the supply chain really is for sustainability and for Givaudan, but this is not a dynamic that happened overnight.

“ As the world changes, so does procurement...”

The evolution of procure-

— Wi llem M u t s aer t s

ment is a tale well told,

Chief P ro c ure m e nt & Sustai n abi l i ty

but it’s also a tale that

Offic e r at G i vaudan

continues to gather pace.

As organisations the world over invest in their supply chain and

“Procurement had to evolve and adopt

procurement functions, Givaudan has

innovative and smarter ways to digital-

spent the better part of the last decade

ise the supply chains and unlock new

implementing the infrastructure neces-

growth opportunities. From Procurement

sary for the company to continue oper-

1.0 (focus on price and seen as mainly

ating to the best of its abilities again and

a negotiator), Procurement 2.0 (focus

again. “Suppliers are also an important

on total cost of ownership and acting as

part of our success. For this the company

strategic collaborator), Procurement 3.0

has developed the Connect to Win initi-

(focus on value and acting as a trusted

ative which is a dedicated platform for

advisor) and lately to Procurement 4.0

suppliers to work with Givaudan on its

in line with Industry 4.0 with a focus on

unmet needs.”

digital where procurement is seen as an

Another important activity that contributes to the increasing demand from

innovation catalyst.”

In 2015, Mutsaerts spearheaded a

consumers for transparency and showing

new procurement direction, connecting

love for nature is Givaudan’s Origination

procurement to all functions across all www.cpostrategy.com

17

levels of the organisation. This

Sustainability: procurement as

strategy, which ran from 2015-

key contributors to Givaudan’s

2020, saw procurement move

global sustainability ambitions

from cost control to value crea-

by leading the way in supplier

tion and increased collabora-

engagement and scope 3

tion. Establishing procurement

“The past cycle was our strong

as a key stakeholder involved in

foundation to be well equipped to

the market strategy, procure-

overcome the many challenges

ment needed to be an agile team

in procurement and sustainability

that seeks alignment with inter-

we have to face,” he says. “Our

nal customers and stakeholders

new strategic direction takes into

ensuring continuous support to

account the fast-moving external

divisional and corporate strate-

developments, the evolving busi-

gies. Procurement, as we know,

ness needs and also the lessons

cannot stand still. As Mutsaerts

learned from the past. It also

noted, the world changes and as

takes in account internal devel-

we speak today Givaudan has

opments such as our company

embarked on the next stages of

purpose and the corporate,

its procurement evolution. One

divisional long term strategy as

that will focus on 5 key pillars:

everything we do in procurement and sustainability is in response

Fuelling Performance: gener-

to an overarching clear business

ating value beyond savings and

ambition and need.”

fuelling growth of the company

The continued evolution of digi-

by driving innovation

tal procurement, which over the

People: empowered and

last few years has accelerated

engaged people with the right

exponentially, cannot go unno-

skills in the right place

ticed. While technology does not

Simplification: a continuous

define the procurement story, it

improvement mindset

certainly enables it in a way like

Business Continuity: striving

never before. Procurement is a

not to lose business opportuni-

function which relies on informa-

ties caused by supply disruptions

tion and so technology has vastly

Pro cure ment wit h p ur p ose

www.cpostrategy.com

19

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improved the way in which an organisation both captures and understands data which for an enterprise looking to improve its environmental impact, can and very much does make all the difference. As Mutsaerts notes: “The current technological evolution is enabling databased decision making, lower costs, enhanced faster delivery, improved level of service and increased automated processes (i.e. invoicing).”

“This is a journey, we still have quite some complexity to manage due to the challenges of the industry we are in and the complexity of the raw materials and services we buy, but we are confident that in the long run, technology can help organisations like ours be more efficient. It is key for our decision making processes to rely on data.”

He acknowledges that where procurement once found itself struggling to access the right information, it now exists in a world where information is more accessible than ever before. Over the coming years, Givaudan will continue to adapt its interfaces and simplify its processes to ‘drive adoption of new ways of working”.

“Only good adoption will allow us to fully grasp the opportunities that can come with the technological advancements we continuously integrate in our organisations,” he adds. www.cpostrategy.com

21

“ We see many opportunities; to do things differently, to push ourselves to go further and to contribute to tackling the big challenges for society. These are exciting times for us all” — W i l l e m M u t s a er t s C hi ef P ro cu re ment & Sustaina bility O ff i c e r at Givau dan

Pro cure ment wit h p ur p ose

www.cpostrategy.com

23

Looking back over the last five years, Mutsaerts has great pride in the work that he and his team have done in bringing procurement to the fore and significantly improving the way in which Givaudan operates. A humble man, Mutsaerts is a firm believer that where he and the procurement function are today is a culmination of incredible collaboration - he does not see himself as the key to any of the successes achieved. He is but a harbinger for procurement’s true value. He recalls a time where, at the start of this procurement journey, he gathered his team together in a hotel as part of a strategic exercise. “A procurement strategy has to be owned by the decision-makers and not by somebody who writes it for somebody else,” he says.

“We as a team went to a hotel and said: ‘We don't come out of here until it's done and we're all aligned.”

He continues: “It was tough because everybody had different ideas from people who were interested, but strangely enough, the outcome of a four-day intensive discussion was a one pager. Everybody knew exactly every word, what it meant, why it was there and why some other things were not there. It gave us a lot of clarity on decision making, what the priorities are and how we want to work together as a Pro cure ment wit h p ur p ose

high-performing team and to this day, it’s worked out pretty well.”

With procurement now well and truly recognised by its business partners, Mutsaerts and his team are shaping its maturity from version 1.0, which focused solely on price to version 4.0; utilising big data, leveraging digital processes and tools, enabling meaningful partnerships to address top line challenges, and sustainability topics as part of the company's 2025 vision.

The duality of Mutsaerts’ role is not the only unique thing about him.

Where we often hear of procurement professionals overseeing a transformation project before moving on to new chapters in their careers, he has had the luxury of working with Givaudan for more than 25 years. Over the course of that time he has worked in sales in Paris, customer relationships in Singapore and headed global operations for fragrances based in Switzerland. He is a successful example of how Givaudan grows its leaders having been exposed to many facets of the business from sales functions in various regions to leading a development center and heading global operations for fragrances. This gives a unique set of skills and credibility to bridge the business with procurement www.cpostrategy.com

25

Pro cure ment wit h p ur p ose

and sustainability for both divisions.

local producers and their communities

As he stands today as CPO and CSO,

truly benefit from working with us.”

Mutsaerts shares his passion for

“Challenges bring opportunities for us

procurement and how it is a passion

to innovate. We want to capitalise on our

shared across his team. A passion that

innovation programme (Connect to Win)

shows no signs of fading away.

to work together with a selection of our

“I really enjoy the journey together with all my team members. In both procurement and sustainability within

suppliers to find innovative solutions for our unmet business needs.”

Every day is different and on a daily

Givaudan, you can make a real impact,”

basis you have to work with internal

he says. “Currently we buy over 13.000

and external stakeholders across the

raw materials from rare natural ingre-

globe which is really enriching. We see

dients to large bulk commodities and

many opportunities; to do things differ-

also a large variety of Indirect Materials

ently, to push ourselves to go further

and Services with increased complex-

and to contribute to tackling the big

ity due to the many acquisitions made

challenges for society. These are excit-

during the last several years. Our team

ing times for us all.”

of approximately 200 global category managers and procurement business partner teams based in all regions of the world and supported by our 3 Global Business Supports (GBS) centers work closely work closely together with the rest of the organisation to ensure that products are responsibly sourced and secure a stable supply to make sure that

www.cpostrategy.com

27

principles CISOs should adopt to protect the Supply Chain

4 pri n c i ples CIS Os sh ould adopt to p rotect t h e Su p p l y Ch a i n

Increased connectivity and digital applications and online services to improve business efficiency has opened new doors for cybercriminals. So how can CISOs better protect the supply chain?

Written by Bindu Sundaresan, Director, AT&T Cybersecurity

www.cpostrategy.com

29

T

he rise in cloud services and increased usage of Internet of Things within the supply chain

has grown the overall attack surface of businesses, while simultaneously presenting new avenues for cybercriminals.

Manufacturers and their suppliers have developed more connectivity within their networks and embraced more digital applications and online services to improve business efficiency. To ensure operations are adequately protected for both manufacturers and their supply chains, new security controls may need to be considered and best practises are undeniably required.

With cyber threats mounting, being aware of key practises to follow to protect the supply chain is vital. If business operations are negatively impacted, then this will affect profitability and overall brand reputation, which can be detrimental to the survival of the organisation. When embracing new technologies, there are four security principles manufacturers should follow:

5G will bring benefits, but pay attention to cybersecurity of assets

and operating interdependently.

Incorporating 5G technology is becom-

There is a wide spectrum of benefits

ing critical for those operating in the

to 5G technology, including lower

manufacturing sector. Indeed, many

latency, an increased bandwidth capa-

smart factories are being powered by 5G

bility, faster and more computing power

which is enabling them to innovate with

which will further intelligence to allow

IoT devices sensing their environments

businesses to react quicker. With

4 pri n c i ples CIS Os sh ould adopt to p rotect t h e Su p p l y Ch a i n

manufacturers playing a critical role in

increases its digital adoption, which

the development of the global econ-

includes 5G, security must be deployed

omy, especially as they supply other key

so that all systems are assessed to iden-

industries like retail and healthcare, the

tify cyber risks with assets connected

impact of not protecting these enter-

to the network while ensuring that, as

prises can be far reaching.

a minimum, they are meeting security

Therefore, as the supply chain

industry standards. www.cpostrategy.com

31

4 pri n c i ples CIS Os sh ould adopt to p rotect t h e Su p p l y Ch a i n

Zero Trust Security is often an afterthought in manufacturing devices, with many businesses rushing to get products to market as fast as possible. Yet, with little to no security in place, this actually puts any organisation that purchases these devices at risk of suffering a significant – and often costly - cyberattack. Cybercriminals are aware that IoT devices may be more vulnerable to attack as they are less likely to be patched or updated on a regular basis.

Yet, considering the valuable sensitive information that can be found on IoT devices, like mobile phones, which regularly connect to the office network, not factoring security can be catastrophic for both the critical infrastructure and the owners of the device.

This is where Zero Trust can play a pivotal role. Zero Trust is a framework that stipulates the traditional “four walls” of a business are not digitally secure.

Therefore, all users, systems, and services functioning within the “traditional” security perimeter must not be automatically trusted. Everything that connects from the outside must be verified before allowing access. Effectively, assume the network and everything connected to it is hostile. If manufacturers were to implement the Zero Trust www.cpostrategy.com

33

framework, they can recognise supply

to ensure security is being embedded

chain failings across the creation, manu-

throughout all the products, services

facturing, testing and delivery of prod-

and processes across the supply chain.

ucts, without ceasing or interrupting

Without it, business continuity cannot

operations. In fact, resea­rch has found

be assured. Where necessary, educate

31 percent of organisations have final-

and provide knowledge on what is

ised their Zero Trust implementations

expected in terms of security: explain

and this is expected to increase as the

the latest threats to be mindful of, take

year progresses.

proactive action and perform cyberattack scenarios to give yourself the

Educate and Collaborate

best platform to prepare. Security is

Security isn’t the responsibility for just

a business enabler, not a hindrance.

the IT department; it needs to be a prior-

Moreover, if IT and operational technol-

ity for the entire organisation. A founda-

ogy (OT) teams collaborate, expanded

tion for this alignment starts with collab-

visibility on all IoT devices can be

oration between the IT department and

achieved and priorities with safeguard-

senior management within the business

ing the data on IoT devices can be

4 pri n c i ples CIS Os sh ould adopt to p rotect t h e Su p p l y Ch a i n

determined, especially as the depend-

assets. Defining security responsibilities

ence on IT and OT intensifies.

amongst the security teams, employees, partners and suppliers will have a positive

Establish a Shared Responsibility

impact on reducing the number of cyber

Model

threats across the supply chain.

A baseline of security should be estab-

Like many others, the manufacturing

lished across the organisation, whereby

sector quickly adapted to the techno-

everyone understands the importance of

logical changes brought upon by digital

security and its strategy is being touted

transformation and this has led to more

from the boardroom and IT teams down

internet-connected systems and data-

to the workforce. Everyone associated

driven processes across the supply

with the business, both employees and

chain. As a result, the attack surface has

the supply chain, must acknowledge how

expanded. To counter the threats that

they can be targeted by cybercriminals

increased connectivity can bring, modern

because with this understanding, they

defensive approaches are required for

will be more apt to take part in sharing

the security resiliency of manufacturers

responsibility in protecting all critical

and their supply chains. www.cpostrategy.com

35

Procurement for A revealing look at how procurement proves key to enabling West Mercia Police to better serve and protect its community...

Written by Dale Benton Produced by Heykel Ouni

Pro cure ment for t h e p eop le

the people

www.cpostrategy.com

37

T

he procurement transformation

and Wrekin in the United Kingdom. With

conversation is often examined

a shared population of 1.19 million people,

through the lens of the private

West Mercia Police is the fourth larg-

sector. Procurement, in this context,

est police area in England and Wales. In

looks to enable greater efficiencies,

September 2020, West Mercia Police

unlock innovation, drive digitisation and

embarked on a significant procurement

generate cost savings for the bottom line.

journey, one that would indeed see procure-

But to reduce procurement to such rigid

ment rise to the fore and align with all of the

terms and to focus purely on the private

key stakeholders within the organisation.

sector is reductive. Where cost savings

Simply put, procurement’s key role in

and sourcing at the best cost and value

supporting the police force was about to

will remain the core function of procure-

truly enter the spotlight and to achieve

ment, doing so in the public sector where

this, it needed someone to drive the jour-

the end-users are the public and the value

ney, someone with a fresh perspective and

is represented through the protection

perhaps most importantly someone who

of a local community is what defines the

had significant experience in procure-

procurement for West Mercia Police.

ment transformation within the private

West Mercia Police (WMP) is the terri-

sector. Not only was WMP looking to

torial police force for Herefordshire,

redefine its procurement function, it was

Worcestershire, and Shropshire, Telford

also undergoing a significant commercial

Pro cure ment for t h e p eop le

J O H N CA M P I O N P O L I C E A N D C R I M E C O M M I S S I O N E R , W E ST M E R C I A P O L I C E Procurement is not broken, it’s just not as good as it can be. Like many organisations, we tend to relive and repeat our mistakes and ask, “how did this happen?” If we procure our uniforms badly for example, in terms of quality or supply, we’re not serving the public because when serving the people.

the people doing the job

when it comes to procure-

haven’t got the right equip-

ment. Savings aren’t

ment. We need to know

financial and they aren’t

that there’s public sector

how that happened and

the treasurer’s problem.

procurement and private

have it within us to change.

Procurement isn’t just for

sector procurement. It is

For example, we could

procurement, it is part of

all just good procurement.

spend less on uniforms and

the system that everybody

We should be taking the

use them more smartly;

is responsible for.

very best at what we are

and that’s just one way in

COVID has shown

I don’t buy into this idea

able to tap into.

The constant journey

which we can be more stra-

us why public sector

tegic when it comes to the

procurement, at times, is

of transformation is about

procurement function here.

amongst the best because

keeping it fresh and people

it does need to be adapt-

are a key part to making

about getting the most out

able and this is impor-

that happen. For me and

of the process, not about

tant as we move beyond

WMP, if procurement is

fixing a gaping chasm. I

COVID and maintain the

serving itself and not the

see this as about improv-

balance between our effi-

organisation, it’s missing

ing our general wellbeing

ciency and effectiveness

the point entirely.

This journey has been

www.cpostrategy.com

39

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transformation to become a much more modern, agile and more responsive police force that was also an efficient, commercially viable, fit for purpose police estate.

Jon Strelitz was brought in as Head of Contracts & Procurement, coming off the back of significant procurement experience with ENGIE. A key part of his remit was to foster better infrastructure and development for West Mercia’s officers and staff to reach their potential whilst providing value for money for the public and create a network of partners, public and third sector agencies working alongside the police to deliver a safer

Jon Strelitz MCIPS, Head of Contracts & Procurement

West Mercia.

“Like any organisation we have func-

the organisation in terms of commercial

tional support, in terms of the services

and procurement services. This encom-

and what we deliver to our customers, our

passes categories of spend such as

communities,” he says. “We're a support

fleet, ICT, facilities management, financial

function offering professional support to

services, uniform & equipment, HR, forensics [traditional and digital], Healthcare, custodial and commissioning work. “It is supporting the business in adherence to public procurement regulations, ensuring the governance and transparency in terms of how we award contracts to our suppliers.”

One of the biggest challenges procurement professionals have faced over the last decade when bringing change to the organisation is a lack of understand-

R i c h a rd M u i r h e a d , C FO We st M e rc i a P o l i c e

ing as to what procurement can bring to www.cpostrategy.com

41

JULIAN MOSS BSC (HONS), MFPH D E P U T Y C H I E F C O N STA B L E , W E ST M E R C I A P O L I C E We’ve always been good

is much more supported.

a better job and we’ll have

at getting project support

I’m seeing fewer prob-

more people to serve the

without any early steer

lems coming through as a

community. We’ve got a

from procurement, which

result of poor procurement

public duty to make sure

has come in far too late.

processes.

that we’re as effective and

With Jon, we’ve made

The reality of what the

efficient as we can be in

the right decisions and

public sees and values is

supporting the service

gone through effective

people. 80% of our costs

that we deliver, which is all

procurement exercises,

are on our greatest asset,

delivered through people.

and been given the right

our people. If we can

advice in setting contracts

spend less on uniforms

organisational mindset

and SLAs. We are now

and use them smartly to

that things took a long

capable of holding those

save time and effort, then

time. The use of tech-

to account. Procurement

our people are able to do

nology, different ways of

I think there was an

connecting and agile ways of working, were probably the most visible. Look at where we’ve come so far with procurement and just look at what we can now do. Our greatest legacy from this will be this sense of recognising what procurement can really do for the organisation and how fast and effectively it can do it, which has been one of the real bugbears of the public sector.

Pro cure ment for t h e p eop le

the table. Be it the public or the private sector, procurement’s biggest challenge has been storytelling and so when we hear talk of ‘having a seat at the table’ this represents a giant leap in the right direction for the function. The journey towards getting there however, is not so simple.

Procurement knows procurement, but does anyone else? And how do you go about convincing a legacy laden organisation that this new look procurement is right for the business?

Rachel Hartland Lane, Director of Business Services, believes that there was a certain ‘mystique’ about procurement prior to this current journey. “Quite often procurement was brought in too late in terms of conversations,” she says. “A last minute thought rather than building it into our business case fully and ensuring that we build in those efficiencies early to maximise the marketplace and get the best value from it,” she says. “We're on a journey, but we're not there yet. We’re starting to demystify procurement, I think, in the organisation so that people understand the value that procurement can add to their business.”

This is a journey built around people understanding the value they can really bring to the organisation. Jon speaks of how a strategy doesn't have a start or an end point. It evolves as it progresses, www.cpostrategy.com

43

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2100507_4

and he was keen to help people evolving along with it against the overarching strategy of WMP. For Clare Griffiths, Procurement Officer in Forensics, this evolution is a top to bottom evolution, not simply one of procurement. “It’s about getting everybody involved. It's not just the procurement staff, or people that work in procurement,” she says. “It's got to be everybody involved, from the budget holders, even the officers on the

Rachel Hartland Lane (MA), (BA Hons), (MCIPD) Director of Business Ser vices

ground. They have to be aware of what procurement really means, and how it can impact on their role.”

This notion of understanding what procurement is and what it can do not only for the business as a collective but for each and every person’s role is an important one for Jon and his team. During his time within the private sector, the fast paced nature meant that there was a constant process of

Richard Walden MCIPS Procurement Business Partner

winning or losing contracts, mobilising and demobilising, or implementing new ideas, concepts or goals together with drivers coming for all parts of the business. Without a competent and well-structured procurement team in place this would all fall apart. While public sector procurement does differ in some places, this complex ecosystem is a challenge shared.

As Wendy Hancock, Procurement

G e o r g e Ta i t , M C I P S Procurement Business Partner

www.cpostrategy.com

45

Pro cure ment for t h e p eop le

Officer, says: “Given our commercial transformation and the work we did there, without procurement things would have gotten quite messy, quite quickly. People would not have known what the correct processes were, causing significant headaches. People know their own roles, but they don't know everybody else's and this has often been the case with procurement. With Jon coming in and

Nicola Gallimore MCIPS Senior Procurement Officer

the strategy we have in place, a lot more people are aware of what we do and what benefits we can bring.”

Any procurement professional will tell you that a journey of this nature is simply not possible without having the right people and the right skill sets, equipped with the right tools, to make it possible and to continue pushing procurement higher and higher to further support the organisation.

With WMP, Jon was blessed with an incred-

David Richardson MCIPS Senior Procurement Officer

ible team of procurement professionals who not only believed in this transformation journey, but truly believed in procurement and what it can do to support policing, allowing local communities to feel much safer and better protected.

When bringing about change, particularly in a function that looks to better align itself with all areas of the organisation, the significance of collaboration and communication cannot be overstated. We hear of procurement transformations driven by a

We n d y H a n c o c k M C I P S Procurement Officer

www.cpostrategy.com

47

new CPO who comes in and outlines the

world gets ever quicker, doesn't it?” he

road ahead for the business and while

says. “This is the fastest we've ever moved,

Jon does fit the description, by his own

but it's the slowest we will ever move.

admission this is not his vision. It’s not

It just gets faster and too much control

even his boss’. “It is ours. It is the team

can really get in the way. Collaboration is

strategy,” he says. “It was incredibly

everything. Finance and procurement,

important to align people to that strat-

for me, really do need to be close together

egy where their greatest strengths are.

to truly enable the organisation.”

They are the subject experts, not me, so it's about engaging with everybody.”

“This strategy sits up high, but that

Jon is a big believer in his team and the people around him because he understands how each and every decision

doesn't mean if you're a procurement

that he or his team makes impacts those

officer it's any more out of reach than

officers out in the field, which in turn

myself. We're all on a level playing field.

impacts the people in the communities

It is our strategy to deliver and we are all

around them. Perhaps one of the most

contributing to the goals and the priori-

rewarding things for Jon and his team,

ties within that plan.”

when viewing it through the private vs

This sentiment is echoed by Richard

public sector lens, is that they can see

Muirhead, CFO. As the CFO, arguably

first-hand what their roles bring to the

he more than anyone else has the most

organisation and how they play a key

significant relationship with the CPO. “The

role in making a real difference. “It is

Pro cure ment for t h e p eop le

incumbent on my team to support the business to get the best deal possible so that we drive a more effective benefit to the communities we serve,” he says.

“A real difference in terms of the way I see what I do compared to my time in the private sector, is that it's less about private profitability and pleasing the shareholders. Here, I want us to be the most efficient police force in the country.

Clare Griffiths MCIPS Procurement Officer

“It's quite an exciting time. West Mercia Police, yes it's a police force, but it's a brand. How can we use the supply chain, the innovation that's out there and the opportunities around social value, how do we help drive that into our communities where we can support the police in doing what they're there to do? That for me is a real opportunity. I am immensely proud in looking at how we can really affect change. That's what I want my team to believe, because if they think it

Fa r zad Ze b Procurement Officer

and believe it, they act it.”

And believe it they do, as Farzad Zeb, Procurement Officer, highlights the need for true alignment. “It's all about having that strategic vision and mission, and a clear direction from the business knowing what they want in the future. Policing has the value around serving the people, serving the communities. It’s making sure that our business strategy is aligned to that frontline policing strategy,” he says.

Ad a m P r i t c h a rd Procurement Officer

www.cpostrategy.com

49

Pro cure ment for t h e p eop le

www.cpostrategy.com

51

“The environment is constantly chang-

infrastructure, results are needed. In

ing, and because of the external pres-

public sector procurement, where the

sures policing needs to adapt to those

funding comes from the very public

changes. We need to be able to adapt

that WMP looks to serve, the need for

ourselves to that change and provide

results, transparency and compliance is

frontline officers with the latest tech-

compounded. And so it should be. But

nology, for the best price, following the

what does this mean then for Jon and

right process and making sure we future

his team and this transformation jour-

proof. With Jon and the team that we

ney? The new commercial model for

have, we are able to get the best out

procurement and for the organisation as

of each other to really drive value and

a whole has already begun to bring about

support that overarching strategy and

wholesale changes to the way in which

frontline policing.”

the organisation operates. Success

In procurement, cost savings often

here will have a huge knock on effect

speak the loudest. When it comes to

for both WMP and its relationships with

a procurement transformation, deliv-

local suppliers and governing bodies, but

ering change and implementing new

also on a national scale. But ultimately,

Pro cure ment for t h e p eop le

success will be defined by those within the organisation as well as those it touches in the local communities.

Adam Pritchard, Procurement Officer, is relatively new to WMP and to the public sector. Much like Jon he came from a private sector background. Transparency, compliance and due diligence are some of the biggest differences he has seen so far on his journey. “West Mercia Police is made up of thousands of employees and on top of that is the public. These products and services that we buy and procure relate to and have a tremendous effect on the public,” he says.

“There is huge responsibility and integrity that goes into this type of procurement. The private sector was somewhat cutthroat in nature. Here, it's far more methodical. We are spending the public’s

and the evolution of procurement has

money and so we need to make sure we

taken a back seat as it reverts back to its

are using it correctly, and fairly and in a

core responsibility, but for others it has

way that drives value back to them.”

truly accelerated transformation.

Given the last 12 months and the

For WMP change was already afoot

COVID19 pandemic, procurement has

with its WMP2020 five-year vision to

truly entered the spotlight for many. As

create a bold new model for policing

companies have sought to ensure busi-

that brings unparalleled change to the

ness continuity, procurement has played

way the force operates. The procure-

a key role in balancing costs, realign-

ment transformation programme sits

ing supplier relationships and ultimately

within that vision, and while the impact

providing resilience and certainty in a

of COVID19 is undeniable, change was

time of great uncertainty. For some, this

always coming for WMP.

has meant that innovation, digitalisation

Richard Walden, Procurement Business www.cpostrategy.com

53

Partner, recognises this. “I see the

maintenance costs guidelines. It is here,

procurement business partner role being

where WMP partnered with Access Group

much more of an interface between the

to leverage its Access Maintain platform.

heads of function and chief officers to

“The platform is cloud based and has an

better understand their challenges, their

app so it can be used on the go and gives

issues and their demands and then shap-

complete visibility and transparency

ing solutions around it,” he says. “You

for West Mercia Staff and importantly

could argue that previously we've been

contractors and end users,” explains Jon.

very reactive as a function. This is a jour-

“As a system, we benefitted immensely

ney towards being proactive, building

from its ease of use and its functionality

real relationships and being more than

to enable enhanced management of our

simply the function that can help achieve

assets across the portfolio, with a key

a savings goal.”

feature in how the system guides users in

That notion of moving forward as a

routing the appropriate response to reac-

stronger organisation, and therefore a

tive work. The system allows the estate

stronger force, is a testament to the work

team to automate the entire workflow,

that Jon and his team have done and

reduce paperwork, emails and manage

will continue to do. Where COVID has

reactive and planned maintenance in a

indeed highlighted the significance of

timely fashion.”

procurement, it has cemented the need

WMP has vastly improved its manage-

for a procurement function that is truly

ment of data to enable the most efficient

aligned to both the strategy of WMP and

planning of reactive work across its

all of its business areas. Earlier this year,

estate and its ability to manage quota-

WMP brought its FM & Estates Services

tion for work so that costs are captured,

in-house and this required not only a new

controlled and auditable.

team to manage a large property port-

“Everything is online and we can access

folio of Police and Fire assets but also

what we need in real time, meaning WMP

the requirement of a CAFM platform that

has full control enabling complete trans-

could give full control and management

parency and visibility across the Estate.”

of reactive maintenance, planned mainte-

Procurement is made up of a strong

nance visits, statutory compliances, risk

team of people, experts in their particu-

management but also a financial solution

lar categories who all work as one and

enabling high levels of control of building

are aligned to the same goals of the

Pro cure ment for t h e p eop le

organisation. As Jon himself acknowl-

what we want to do. But make no mistake;

edges; it’s highlighted just how impor-

we want to do a lot and we will do a lot in

tant cross-functional collaboration is to

the near future,”

achieving any form of success for WMP.

Rachel Hartland Lane adds: “Our

As WMP emerges from this COVID19

vision and values as a police force are

era, this procurement journey will

to protect people from harm. That's ulti-

continue. It will shift and change as the

mately what we're here to do and so the

world around it, and the face of policing,

efficiency and effectiveness of our police

changes with it. Jon, through all of his

service is absolutely vital. There’s an

years in the private sector, understands

immense amount of pride in ensuring that

that budgets will fluctuate and so he is

we enable our officers and staff to have

keen to stress that he and his team have

everything that they need. Procurement

a duty to continue delivering the best

plays a key role in this, and we don't lose

resources and best value to WMP in order

sight of the fact that everything we do is

for WMP to serve its community both

about protecting our public.”

today, and long into the future.

“We must always remember that we are funded by the public purse,” he adds.

“We've got a finite amount of budget in www.cpostrategy.com

55

‘Procurement as a growth engine’ partnered by

P

rocurement is evolving. No

research, capability tools and digital

longer a merely back-office

and live events. Procurement Leaders

function designed to drive

has 775 companies in its network with

down costs, the procurement function of

35,000+ procurement members and 120

forward-thinking enterprises is now a

solution providers. Its members include:

trusted strategic partner that can maxim-

IBM, The Clorox Company, Bayer,

ise potential and value from its unique

Johnson&Johnson, Heineken, Telus,

position at the heart of operations.

JLL and Schneider Electric.

Procurement is enriching both the pros-

Procurement Leaders’ latest report

perity and the growth of organisations

Procurement as a Growth Engine (part-

through the CPO’s invaluable insights

nered by Ivalua) explores how procure-

and actions.

ment can bring new opportunities for

Procurement Leaders, as you will

growth, as forward-thinking business

undoubtedly know, is a global intelli-

leaders become increasingly aware of the

gence platform for chief procurement

huge potential that exists in the upstream

officers and their leadership teams

supply base. That potential can manifest

that offers strategic guidance through

itself in many ways, but organisations

Pro cure ment as a grow t h engine

PROCUREMENT LEADERS REPORT

www.cpostrategy.com

57

that remain fixated on driving cost from supplier contracts alone will be at a significant competitive disadvantage in the years to come.

It is an evolution that has been taking shape for many years, but which is picking up speed as progressive procurement functions become more strategic

73%

The proportion of senior procurement executives who say their function supports revenue growth by scouting innovation — S o u rce : P ro cu rement Lea ders

and wield more influence over company boardrooms. COVID-19 has seen just how crucial procurement can be in keeping companies operational and successful during major disruptions.

Unlocking the value of procurement Procurement as a Growth Engine cites a number of considerations for CPOs and other members of the c-suite, as they look to unlock the rich value of procurement. Innovation scouting is one such endeavour with Procurement as a Growth Engine reporting that 86% of senior procurement executives claim that their teams support revenue growth, with almost three quarters of those citing innovation scouting as the biggest opportunity for doing so. Innovation scouting, both within the existing supply base and beyond, presents procurement’s greatest opportunity to contribute to revenue growth. Too often, however, businesses limit their search to those suppliers with which they spend the most money, or

Pro cure ment as a grow t h engine

those that present the greatest risk, crite-

the importance of scouting innovation

ria that say precious little about a suppli-

from different sources, showing that

er’s innovation potential. Instead, CPOs

supplier ideas will offer the greatest

must adopt more meaningful segmen-

competitive advantage under present

tation criteria and cast their nets much

business models while startup ideas

wider to take full advantage. The report

are more likely to provide fuel for future

dives deep into the possible solutions to

growth strategies.

enable scouting teams to find the most suitable innovations that the business can

The rise of supplier-led innovation

adopt, while addressing pertinent queries

Effectively driving supplier-led innovation

such as…

has never been more important. The pace

• Is scouting more effective when

of innovation has increased sharply in

carried out using a formal process?

• What do the differences in how

most industries, against growing competition and customer expectations. At the

teams practise this say about how

same time, increased outsourcing of

businesses can best use scouting

production means more expertise and

to drive growth?

intellectual property lives outside the

• And how do you identify the most

organisation. Even the most innovative

important innovation partners?

organisations can benefit from extend-

For example, research from the

ing their talent pool beyond their four

University of Bayreuth emphasises

walls, as can those that have maintained www.cpostrategy.com

59

in-house research and development and production capacity. The report details a number of recommendations on how to maximise supplier-led innovation through both strategy and technology.

Looking further afield: Advanced segmentation The Procurement Leaders report also

88%

explores how organisations are tapping into innovation from myriad sources, including long-term strategic suppliers, while also looping in others with innovation potential, including start-

Proportion of procurement executives who report scouting innovation from strategic suppliers

ups and small to medium sized enter-

— S ou rce : P ro c urem ent Lea ders

of those, 60% have gone on to have a

prises. Procurement Leaders member, Schneider Electric, is a good example of an organisation that is fully focused on driving innovation and procurement.

As explained in detail in the report, 20% of the supplier innovations identified have ultimately been adopted, and, positive revenue impact.

CPOstrategy caught up with Dan Bartel, CPO of Schneider Electric recently, and he revealed a significant transformation journey designed to drive new value to the company through procurement.

When Bartel joined Schneider Electric, the strategy for procurement had already been laid out and defined. During 2020, Bartel and his team delivered against this

Pro cure ment as a grow t h engine

strategy and fine-tuned where needed.

a crystal ball on what the future holds,

One such part of this was improving

therefore, to understand better the

the way in which Schneider looks at the

leading trends in procurement we have

market and how it influences the busi-

amped up our efforts to exchange our

ness offering. “You don't want to build a

learnings externally with other compa-

functional strategy just based on indus-

nies like Procurement Leaders and learn

try trends and what everybody else is

from our peers across industries.”

doing,” Bartel explains. “We need to be

Of course, supplier innovation and

where the ball will be. Post-COVID, we

scouting aren’t the only methods that

clearly see the need to have more ‘just-

procurement can use to drive growth –

in-case’ supply chains with redundancy

cost optimisation is another powerful

and resilience factored in. We need to

lever, and one which must be differenti-

build in climate considerations as part

ated from traditional savings. By adopt-

of our competitive strategy. No one has

ing advanced cost modelling techniques www.cpostrategy.com

61

and working collaboratively with suppli-

growth from the cost base is by facilitat-

ers to engineer cost out of the value

ing the flow of pricing information from

chain, procurement functions can drive

purchasing to sales, so the business can

meaningful competitive advantage with-

better optimise its pricing strategies. This

out harming supplier relationships or

form of sales-procurement collaboration

introducing unviable risk.

will prove especially fruitful for compa-

Advanced procurement teams are

nies that source commodities, as the

optimising costs by practising value-

cost of those materials will directly affect

based procurement, synchronising sales

the price of their products.

and purchasing, using supplier expend-

Advanced techniques are being

iture to release capacity for growth

deployed by some organisations to

opportunities, and enhancing cost

tackle the volatility that companies

modelling through digitisation.

face and gain an edge in the market

One way procurement can drive Pro cure ment as a grow t h engine

by responding to price movements

72% incredibly quickly, and the report explores how one company has developed a mobile app in order to do just that. “In 12 hours, the bill of materials for every product related to that raw mate-

Procurement executives who report scouting innovation from startups and scale-ups

— S o u rce: Pro cu rement Lea der s

rial will be updated, and an email goes to the marketing manager to warn them the price has changed by this much, so they need to change their price by this percentile to maintain their margin.”

The tool will provide the company’s sales managers with near-real-time visibility of commodity price changes, allowing them to adjust their pricing www.cpostrategy.com

63

strategies more precisely. “We’ve made

remain even when COVID-19 is a distant

the process interactive, so we don’t have

memory. Analysis by McKinsey found that

to wait for a meeting,” the CPO says.

companies can now expect to encounter supply chain disruptions that last a month

Optimise spend to

or longer every 3.7 years, with losses

maximise resilience

equal to almost 45% of one year’s profits

The coronavirus pandemic highlighted

over the course of a decade.

the vulnerability of many companies’

The financial strain caused by the

supply chains, as well as the revenue

pandemic has also forced a rethink on

impact of that vulnerability. While cost

project priorities, as Bartel at Schneider

remains important, cost-centric strate-

Electric noted. “We're making big invest-

gies such as single, low-cost country and

ments in digital and some of those were

lean sourcing must be weighed against

slowed down a little bit, but there are

their impact on resilience. This reality will

other aspects of digital, like how we

Pro cure ment as a grow t h engine

interact with our suppliers that we are bringing forward. As an example, we have source-to-contract tool deployment that we accelerated substantially because it helped us through the (COVID-19) crisis.”

The Procurement Leaders report reveals how technology can act as a critical enabler to optimising spend and resilience. First, the right source-to-pay (S2P) technology (as seen at Schneider) can give you the necessary visibility into suppliers, while addressing issues such as duplication in back-end systems.

Chassis Brakes International (CBI), for example, leveraged Ivalua’s platform, with embedded master data management capabilities, to unify supplier data across 25 SAP instances for a truly global view of spend and supplier performance.

Those organisations that open their eyes to the opportunities that exist in the supply base will be the ones that prosper and outperform their peers in the coming years. That means adopting new

63% Procurement executives who have a process for scouting innovation from suppliers and third parties

— S o u rce: Pro cu rement Leader s

digital techniques and new segmentation approaches, while also being open to collaboration with a more diverse set of partners than ever before.

Click here to download Procurement Leaders report on Procurement as a growth engine. www.cpostrategy.com

65

IN

CONVER

In c o nve rs at ion wit h Lance Younger a n d D r. E l o u i s e E p stei n

RSATION WITH...

Lance Younger and Dr. Elouise Epstein

Lance Younger, CEO and Founder of ProcureTech, joined Dr Elouise Epstein, Partner, Kearney, to discuss why 2021 may represent a crucial turning point in the continued evolution of digital procurement…

Written by

Dale Benton www.cpostrategy.com

67

Dale: As we speak in 2021, digital

very immature in its development. You

procurement, whether it’s digital trans-

can put in end-to-end procurement tech-

formation or procurement technologies,

nology and you’re 100% mature on what

is nothing new. It didn’t suddenly happen

is, in essence, 1990s technology or early

overnight. Digital procurement has been

2000s technology. What’s different now

discussed for well over a decade. In recent

is we’re in this digital age and we have

years however, it has certainly become

Amazon, iOS devices or “AI”, we have

much more of a priority for procurement

cryptocurrency, we have massive tech-

and business leaders. So where are we

nological innovation and there’s a huge

right now in terms of what procurement and

disconnect between what our systems do

digital procurement can do to solve critical

and what is out in the zeitgeist.

business challenges?

It’s an overused cliché, so I apologise for using it, but I go to Amazon and I can buy

Lance Younger: We are at a unique

15 things I didn’t know I needed in three

point in procurement’s evolution. I think

minutes or less. There is one click, one hour

we probably hit it a couple years ago and

delivery sometimes and all these innova-

there’s an opportunity for procurement to

tions and yet I go into the corporate envi-

take advantage of the demand as well as

ronment and it’s just a disaster. We have

the supply; especially where you’ve got

this old mindset. There’s a revolution if you

new solutions in the market. This is being

will, because we can’t keep doing what

fuelled by venture capitalists and investors,

we’ve been doing and so we need a point

but also by a new breed of procurement

of departure. What you see is Silicon Valley

leaders that are looking to lead ‘digital-first’.

venture capitalists responding to that. You

If you can get alignment between lead-

have this immature technology and at the

ership, ambition, capital and investment,

same time you have a lot of people that have

together with the right solutions in the right

realised there’s a better way and they’re

environment, digital procurement will be on

putting their money where their mouth is.

fire, in a positive way!

Dale: So we’ve reached a critical point in Dr. Elouise Epstein: This is my favour-

procurement’s evolution, maybe even the

ite topic [laughs]. Procurement technol-

true peak of it. What do you think the last 12

ogy has failed to deliver against expec-

months and the global pandemic have done

tations. Even if it had delivered, it’s still

for that conversation?

In c o nve rs at ion wit h Lance Younger a n d D r. E l o u i s e E p stei n

L a n c e Yo u n g e r, CEO and Founder o f P r o c u r e Te c h

www.cpostrategy.com

69

Dr. Elouise Epstein: We have a new

that leaders continue as they were and

generation of CPOs stepping into the

build an even bigger gap between them-

fold. They’re building their careers on the

selves and the rest. It’s been statistically

mistakes of those that came before them.

proven, over and over again, when you

When they look at sustainability, they’re

invest in digital, or you invest in people,

not going to fix what the existing process

that you will get greater shareholder

is, they’re going to reimagine the process,

return. Now we’re going to see it accen-

because it’s their turn to put their stamp

tuated where, if you take sustainability

on the way procurement operates. We all

as an example, many people are looking

talk to a lot of CPOs, and that’s the one

to fix existing processes, as opposed to

thing that really stands out for me, is this

evolving them, or indeed bringing in new

unwillingness to perpetuate the failures

digital solutions.

of the past.

This is a microcosm of everything that is going on in procurement, where there’s

Lance: There’s a real danger at the

a significant opportunity for procure-

minute, whether it’s from COVID or the

ment to introduce new solutions and new

change in agenda towards sustainability,

processes rather than just trying to fix

Watch

In c o nve rs at ion wit h Lance Younger a n d D r. E l o u i s e E p stei n

Dr Elouise Epstein, P a r t n e r, K e a r n e y

www.cpostrategy.com

71

existing or plugging small gaps that exist at the minute.

We are also seeing functions and areas of procurement that have grown to a stage where it’s ‘good enough’. They’ve got good core processes and a good team in place, they’ve got the basic technology in place and it’s good enough; it’s fit for purpose. Then you’ve got others that are from a company like Nike or McDonald’s or even a Microsoft and the thing that really matters to them is innovation, cost effectiveness or social responsibility and they’re starting to take it a step further. Now part of that is the obvious, which is raising the agenda around innovation, digital innovation and access to innovation. But part of it is how it ripples into how they structure

entrepreneurship across the enterprise.

the organisation, which categories they

Look more recently with Panasonic’s

look at and where they look to extend

acquisition of Blue Yonder earlier this

procurement’s enterprise role to enable

year. Why have they done that? They’ve

them to excel in these areas.

done that to go beyond, to excel.

You’ve seen this in the past with organisations, for example HSBC, working

Dale: Do you think it’s fair to say that this

with digital procurement solutions like

moment in time represents one of the

Tradeshift and simultaneously investing

biggest opportunities to really progress

in them. Not for their procurement capa-

beyond what even seasoned procure-

bility, but because HSBC could then offer

ment professionals thought the function

a trade financing solution to their corpo-

could be?

rate clients. You see there’s a natural evolution of the USP that procurement

Lance: Yes. If you think about it in terms

provides with regards to commerce and

of the decade, there’s a lot of reasons to

In c o nve rs at ion wit h Lance Younger a n d D r. E l o u i s e E p stei n

believe we should be doing things very

are at this intersection of a new gener-

differently during this decade. As a trend,

ation, digital tools, macro-disruptions,

as a period of time, we’ve gone through

new leadership, and so on and on and on.

them in the past. We’ve gone from the

There’s a whole bunch of other variables.

90s where it was about price into the new

I think it’s a great time.

century when it was about cost. Then

Now, that’s the positive view. The

we’ve moved into risk, then innovation

negative view is there’s a burning plat-

and sustainability. We just need to set the

form, because the organisation has all

right ambitions, within the right individual

their processes buttoned up and it’s fit

organisations which provides the right

for purpose cost savings management,

base to build from.

that’s going to get automated. So if you’re a procurement group and that’s your

Dr. Elouise: I 100% believe that. I

reason for existence, I’m not saying today,

frequently say that now is the greatest

but over time that’s going to get eaten

time to be in procurement, because we

away. It’s going to be a shrinking ice cube. www.cpostrategy.com

73

Dale: Give me an idea as to what’s

we can reimagine the entire op model.

happening to the operating models

Look at category managers. To me,

that are defining the procurement func-

technology and analytics eviscerate

tions of today?

the need for category managers. Why not get good people that are leveraging

Dr. Elouise: It changes fundamentally

the data and that the tools that are driv-

and drastically. I do a lot of digital work

ing a lot of this? All of a sudden when

and oftentimes people want to do digital

you take category managers out, and

first, and that’s great, there’s no problem

eventually commodity managers, you

with that. But digital is maturing so fast

change the fundamental makeup of the

it becomes pretty obvious very quickly

procurement organisations. Few people

that all of a sudden, they need different

agree with me on this today, but I guar-

people, or their processes are way too

antee you I’m right. When you get tech-

complicated and their governance is

nologies like smart contracts in the near

totally out of whack compared to what it

future being used more, that changes the

could be in this new way of working. This

entire P2P construct. The way we think

is the beauty and the excitement because

about the procurement value chain has

In c o nve rs at ion wit h Lance Younger a n d D r. E l o u i s e E p stei n

Watch

to change. As we do that it changes the

the key roles? What were the people

op model in ways that we are only begin-

doing? How many? Where? Which loca-

ning to think about.

tions? The technology? How far? Which technology? Where? Then, the insourc-

Lance: The whole operating model

ing, outsourcing or out-tasking; what was

discussion is an interesting one. In the

going to sit inside and outside the organi-

last four years, I’ve done five substan-

sation? Procurement leaders are creating

tial pieces of digital work and they’ve

a fundamental step change through inte-

started in different places. One was an

grated op models, outsourcing and digi-

outsourcing discussion, the other was

talisation changes.

an op model discussion and two of them, digital procurement implementations.

Dale: As technology continues to

All of them ended up in the same place,

advance, as marketplaces grow, so too

with a conversation and solution which

does the number and sheer scope of how

involved op model, outsourcing and digi-

many solutions are out there promising

talisation. Understanding what the op

the solution that’s right for your busi-

model was going to look like: what were

ness, to fix your particular problem. How www.cpostrategy.com

75

difficult is it to cut through all the noise

showed any signs of changing. As tech-

and identify liaise with and establish real

nology advances and as startups come

working relationships with a tech vendor

along, startups and disruptors continue

that has the right solution?

to create a dynamic shift, forcing those larger incumbents to suddenly look over

Lance: I think the biggest challenge is

their shoulders and think, well, what do

on the buy side, not the supply side. With

we need to change? Is it fair to say that’s

the opportunity for organisations to be

happening then in the tech space from a

able to choreograph how they engage

procurement perspective?

with technology providers. Because all too often, there isn’t an overall strategy,

Lance: The whole market is forecasted

plan, roadmap. Then there isn’t an appre-

to grow 8% year on year. The absolute

ciation of how you can bring on different

amount of the market will stay the same

solutions at different stages. When you

for some of these bigger players, but

engage with a large number of small play-

some of these smaller and mid sized

ers, you need to be set up in the right way.

players that are successful will get higher

A few organisations are doing this. They

growth. I think we’ll see some of that

have an infrastructure that can accept

market share also taken from ‘outside’.

and integrate. They have an agile way of

Solutions coming from legal and covering

working. They have an appreciation of

the contract management space as we’ve

how they run pilots and how they take

seen with risk as well.

pilots through to scale to roll out. I think that’s incumbent on the procurement

Dale: As a CPO or as a procurement

function to have that level of maturity or

professional, what are some of the

sophistication to be able to engage with

biggest ways you’ve had to almost rethink

the software players in the right way. Find

how you approach what procurement and

them, engage them and then scale them.

digital procurement are, over these past 12 months?

Dale: Once upon a time, you only really heard from and listened to the

Lance: To a degree, procurement

larger incumbents because they domi-

has almost come full circle. If you go

nated the industry, they had the high-

back to the 90s, procurement was very

est market share and that never really

decentralised. Everyone was buying

In c o nve rs at ion wit h Lance Younger a n d D r. E l o u i s e E p stei n

everywhere and anywhere they wanted

make sure you get compliance. You don’t

to. Then, it was viewed as being out of

necessarily need to centralise everything.

control. Whereas now we’re in an age

You’ve got that transparency, you’ve got

where you want to empower people to

that equilibrium, you’ve got that democ-

buy where they buy. You want to decen-

racy. It’s a bit of a bold vision, but at the

tralise things. You’ve got the next gener-

same time, I think those are the things

ation of individuals coming through

that we can now envision happening. I

that are used to point of purchase and

think we have to because we’ve got a set

on-demand.

of consumers, we’ve got a set of suppli-

In turn, leadership is shifting their mindset. They are shifting their behaviours to

ers, we’ve got a team who are expecting that as well.

be more inclusive, more diverse and using digitalisation to enable decentralisation

Dr Elouise: Think about each of these

of procurement You don’t necessarily

new technologies that come out, that’s

need to rule with a mandatory policy to

going to change business models. www.cpostrategy.com

77

In c o nve rs at ion wit h Lance Younger a n d D r. E l o u i s e E p stei n

Watch

Think about 3D printing, that’s a great

really interesting about where we’re going

technology, but if you’re a medical

in the future because all of a sudden, not

device provider and you start printing

only are we at the table with the business,

3D components or surgical instruments,

but rather we are part of the business.

well, what’s the implication there? All of a sudden, you’re now contracting with

Dale: Many CPOs have said to me, and

third-party printers, because you’re not

almost confessed, that they have felt

necessarily going to buy the printers

that procurement hasn’t done enough

themselves. You will probably partner

and that it should not have taken the

with a new type of supplier. Which means

pandemic to propel and accelerate some

you are going to need new types of

of these conversations. Do you agree?

agreements to protect your IP, because all of a sudden, you “hit print” and your IP

Dr. Elouise: Well, for the most part

goes across the ether, then it becomes

it’s self-inflicted. Look at what a “Best

a much different way of operating. It’s a

in Practice” is. It’s a big source-to-pay

new business model and procurement’s

implementation. So, 3-5 years and 30,

at the centre of it. That’s what I think is

40 million dollars later, you’re supposed www.cpostrategy.com

79

to have a fully functioning “Best in

within a year, the middle management

Class” procurement operation. Who has

turns over and eventually the leader-

achieved that? Very, very few people.

ship turns over. That just ensures those

Failed big source-to-pay implementa-

projects fail to deliver.

tions often signal that the “Best in Class” is not really that. It’s just a way of perpet-

Dr. Elouise: This is where the people

uating the status quo.

component comes in, because we

Organisational turnover leaves

should be out in the market talking to

the proverbial fox in the hen house,

the folks and having a comfort level. We

because the only people that are the

all have iPhones or Android devices,

continuity are your external system

how many apps do we have on there?

integrators and the tech vendors. So

20? 40? 100? The complexity of apps

In c o nve rs at ion wit h Lance Younger a n d D r. E l o u i s e E p stei n

is not the problem, it’s the desire to

advances and as startups come along,

go and look at these and engage with

startups and disruptors continue to

them. There is a cultural change that’s

create a dynamic shift, forcing those

happening where we’re not afraid of the

larger incumbents to suddenly look over

complexity anymore.

their shoulders and think, well, what do we need to change? Is it fair to say that’s

Dale: Once upon a time, you only really

happening then in the tech space from a

heard from and listened to the larger

procurement perspective?

incumbents because they dominated the industry, they had the highest market

Dr. Elouise: They are all threatened.

share and that never really showed

How they react is going to be different,

any signs of changing. As technology

based on where they are at, but you already see this. Ariba just announced their app store and so we’re going to see that take shape. Coupa already had an app store. You can start to see the signals that they are shifting because, for better or worse, whether it’s right or wrong, they’ve lost the credibility around innovation and the ability to deliver.

Time to benefit is shrinking.

Everything the big players are selling is falling flat, not to mention a two decade history of failing to deliver. I think if you’re a big player you have to shift and you are starting to see them shift. Not all of them are going to make it, I can guarantee you that.

Dale: What do you think is going to be key to ensure that we capitalise on this incredible opportunity that stands in front of procurement right now? www.cpostrategy.com

81

In c o nve rs at ion wit h Lance Younger a n d D r. E l o u i s e E p stei n

Watch

Lance: Over the next year, I’d pick one

little bit scary as well as exciting, but then

pain point or one challenge, and then

realise that you’re not going to do it by

go and find one or two, existing or new

yourself. You won’t be able to do it without

solutions that are going to really address

support from other players in the ecosys-

that and help you change something. For

tem and the broader that ecosystem is

me it’s sustainability, whether it’s track-

the better.

ing products or something to do with your carbon footprint. Spend the next 12

Dr. Elouise: You need to set yourself

months finding and implementing a solu-

a bold vision and an associated strategy

tion, because there will be a technical

with that, because now is the time to have

solution somewhere that’s going to give

the board’s ear. Everybody is looking at

you transparency, speed and it’s going

sustainability, supplier diversity, risk, in

to give you accountability that you didn’t

addition to cost savings and innovation.

have before. Start there.

Now is the time to take something bold

Think big and bold. Set a goal that’s a

and really run with it. www.cpostrategy.com

83

How procurement will prove key to restore business growth...

Ivalua, together with Forrester Consulting, evaluated how the procurement function can help businesses restore growth as we emerge beyond the COVID19 pandemic. As procurement has been elevated, maintaining that status and delivering more strategic value will require hard work from leaders. Here, we take a look at some key findings…

Written by

Dale Benton

How pro curement will p rove key to resto re b u s i n es s grow t h . . .

www.cpostrategy.com

85

How pro curement will p rove key to resto re b u s i n es s grow t h . . .

“ Procurement is tied closely to most parts of the business. 64% of procurement leaders want to help their firms identify new revenue growth opportunities” Strategic objectives have greatly increased in priority for procurement since the outbreak of COVID-19.

Business agility, revenue growth, and supplier collaboration have risen the most and require new strategies for procurement to succeed in unlocking value. www.cpostrategy.com

87

How pro curement will p rove key to resto re b u s i n es s grow t h . . .

“ 85% of executive leadership recognizes procurement’s role in revenue and margin growth” Procurement leaders remain prone to overestimating performance relative to peers.

For example, 83% believe they collaborate better with suppliers than their competitors do. However, most procurement organizations struggle with the complexity of managing the plethora of digital solutions available in the market and developed in-house. Mastering this internal complexity effectively requires chief procurement officers (CPOs) to align their objectives with other executives in their organizations, which is a clear indicator of organizations inflating their capabilities. www.cpostrategy.com

89

“ 70% of procurement leaders believe that AI will be the most important technology in the next one to three years”

Companies are employing new tactics to achieve these objectives, relying more greatly on technology.

Technological innovation is a critical component to overcoming periods of crisis, like we saw in 2020. Procurement leaders have pivoted to use digital levers to reshape their innovation efforts — now and for the post-pandemic world.

While technology can be a key enabler, it can just as easily be an obstacle if not selected and applied correctly.

Although new systems and emerging technologies can modernize organizations in the digital age, when not applied or integrated properly, they can create barriers to evolving and meeting strategic objectives.

How pro curement will p rove key to resto re b u s i n es s grow t h . . .

“ Improving supplier collaboration ranks as the top procurement strategy to increase business agility (39%) and help grow revenue (60%)”

www.cpostrategy.com

91

Key Recommendations Forrester’s in-depth survey of global

Engage the business.

finance, procurement, and supply chain

There are multiple ways procurement can

decision-makers in Europe and North

contribute to revenue growth, but these

America, combined with Forrester’s

generally require close collaboration with

broader research, has yielded several

other functions to identify and execute.

key recommendations for CPOs and

Procurement can’t operate in a silo and

procurement teams when it comes to

achieve more strategic objectives.

restoring revenue growth. To do this, organizations must:

Improve supplier collaboration.

Leaders recognize this as a priority and

Realistically assess current

believe they are performing well, but

performance and capabilities.

there are reasons for doubt. Eighty-three

Most believe they are better than peers,

percent believe they are collaborat-

which can’t be true for all. Such overcon-

ing better than peers, but only 34% are

fidence reduces pressure to address

focused on establishing their organiza-

shortcomings and improve.

tion as a customer of choice, and most organizations plan to broaden their supply base. Leaders need a holistic plan, creating procurement and supplier incentives and enabling effective, scalable collaboration via technology.

“ 83% believe they are collaborating better than peers, but only 34% are focused on establishing their organization as a customer of choice” How pro curement will p rove key to resto re b u s i n es s grow t h . . .

Leverage technology smartly.

data quality, create new chokepoints

The right technology can help in many

in S2P processes, and limit flexibility to

ways: especially freeing capacity, improv-

implement new ideas and processes.

ing access to insights, and enabling

Technology should empower innova-

scalable, effective collaboration. But

tion, not be the innovation itself, so select

the wrong technology, or technology

and deploy technology that will address

choices made in isolation, can hinder

current and future needs. www.cpostrategy.com

93

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