Since the New Year has arrived, it's time now for the annual onslaught of Procurement Prognostications for 2015. Of course a year from now, what actually transpires may bear little resemblance to what was predicted – and who really goes back and reconciles results with resolutions anyway? But at least in this case, an educated guess can be made as to what procurement leaders will actually be focused on in 2015, based on their responses to a recent joint survey conducted by Zycus and The Hackett Group of over 200 procurement leaders and practitioners.
Richard Waugh, Vice President, Corporate Development, Zycus Inc
What is the source of procurement's value to the enterprise? How do organizations become more effective and efficient in achieving sustainable cost savings? How can procurement deliver even greater value to the enterprise? These questions are essential to the continuous improvement of the sourcing and procurement function. They are the questions at the foundation of the IBM Institute for Business Value (IBV) Chief Procurement Officers (CPO) Study which examines the "journey to value" for procurement organizations – and details the specific procurement strategies that drive business results and bottom-line impact. The study, based on a survey of more than 1,000 procurement executives across more than 40 countries, takes a deeper look at "procurement role models," the 100+ companies in the study that achieved the most impressive revenue and profit performance relative to their industry peers. The research identifies three common attributes that tend to separate these procurement role models from the pack. These high-performing procurement organizations:
Matt McGovern, Market Segment Manager - IBM Procurement and Contract Management Solutions
In all my years attending SIG and similar sourcing conferences (often from the outside looking in), I have never observed this degree of nervousness around a new innovation as that surrounding Robotics Process Automation (RPA). Speakers struggle with how much development background they should share before launching into the topic. Conference attendees eagerly lap up nuggets of information that can add to their meager understanding of the topic. And the few who "get it" seem to be oblivious to the general discomfort of mainstream sourcing professionals whenever robotics is mentioned.
Recently, during a trip to visit suppliers in India, I similarly noticed a strange awkwardness surrounding the marketing of both RPA and analytics. When developer/programmers are asked to explain product offerings, they trip over themselves a bit cautious that buyers may not be able to grasp the computer science, statistics or mathematics of the product offering, and consequently resort to demonstrating actual end-user applications without ever really saying, "We have a miracle here, and we want to share it with you! And there is so much more we can do each week!"
We spend months preparing for each Summit...and then a week getting ready for the arrival of our delegates...and then a few days with them...and then in a blink of an eye it is over and we start again. It goes by too quickly but the lessons learned are vast and permanent. Over the next few blogs, I'll share some insights I gleaned from our keynote speakers at the last SIG Global Executive Summit. The first was retired Colonel Anthony (Tony) Wood, best known for his heroic role in the evacuation of Saigon in April 1975. Colonel Wood addressed SIG in a general session and also spent time with our most senior delegates in an exclusive CPO Roundtable. These were my key takeaways from his two presentations.
Moral courage is knowing what to do, even when you know it may cost you. Colonel Wood shared a story of leading civilian volunteers through the most unimaginable circumstances. Risking their own lives, roughly 100 American civilians in their 50s and 60s, volunteered to help evacuate 5,300 people from Saigon, a city that was collapsing. In the face of an advancing enemy army, this incredible group of people put the lives of others before their own. In a business context, knowing what to do and actually acting on it, even though it may not be in your own personal interest to do so, is difficult...but having people with that attitude on your team is enormous. Moral courage is a critical piece of business leadership.
You go to the three-day SIG Summit to learn new practices, solidify standards and make business connections. The Denver Summit will be my seventh. The speakers are uniformly excellent, the first-class entertainment on Wednesday night is always a surprise, and the Thursday night event is fun-filled and relaxing. But it's Tuesday's Speed Networking event that tops my list for an informative and high-energy way to make new colleagues. If your goal is to meet as many Summit attendees as possible, then attending Speed Networking on Tuesday afternoon is a must. And no, I'm not just tooting SIG's horn here. There is a sense of camaraderie that you get at Speed Networking. Sure, it is a bit like speed dating at first...but once the buzz fills the room, the air is electric. Speed networkers are trying to broaden their connections by increasing their exposure – and this venue is the perfect opportunity to accomplish that. SIG used to host Speed Networking on Wednesdays during the Summit, and I was always a bit frayed by that – why wait for the second day, when everyone can meet on the first day?! Because what we do best at SIG is to brainstorm ways to continuously improve, we changed the venue to Tuesday, the first official day of the Summit. For those who have not attended, we fill the largest ballrooms with huge rounds of tables and place chairs on either side. Nearly everyone attends. The corporate buy-side attendees move around the perimeter. The sell-side attendees stay put. SIG staffers happily serve beer and wine to help break the ice. And as if we couldn't make this event more fun...there are REALLY great prizes for the buy-side attendees – just put your business card in the bowl that is passed around prior to the event beginning. The din that ensues is lively, productive and fun. You have a few minutes with each person, introduce yourself, your company, even your kids if you must.
I recently dropped off my oldest son at college. It was a momentous time sending my first child out the door. Not only did it bring a flood of my own college memories back, but it also made me realize that we often wait until the last minute before we impart the pearls of wisdom that might be most helpful in a new setting. I took the opportunity to write an article (if you call a Facebook posting an "article") to him, chock full of advice on washing clothes, changing sheets, using good judgment and much much more. As I reflect on that moment, it makes me realize that often when we approach the Summit, we assume people don’t need our advice on how to make the Summit a great experience...and you know what they say about assumptions. With three new SIG employees, it occurred to me that perhaps some Summit pearls of wisdom might be in order, so here goes:
Don't miss the networking events. Most people come to events for two reasons—the first, education is what gets the approval for the plane ticket, but it's the second, networking that often gives you the most bang for your buck. One conversation can help you solve a problem...or create a lifelong resource...or even identify a potential vendor or partner. Because of that, we factor in a lot of time for networking. Our breaks are long and our evening events are lively and fun. For real energizing networking, our Tuesday evening Speed Networking is not to be missed. Even if networking is not something that comes naturally, this "speed dating" style of networking makes it easy to meet people quickly, exchange business cards and move on. On that note...
One-on-One is a new Q&A series with leaders in the SIG community. Cost savings. Process efficiencies. They're synonymous with procurement and among the terms most used to describe its role within the enterprise. And with good reason. Over the last decade, procurement has transformed itself from a back-room function to a strategic capability by delivering them. But a new term has entered the lexicon: innovation. There's no doubt that procurement today is a different game. It's more connected, informed and some might even say "social" than ever. Just as consumers tap into personal networks to learn, share and shop better, procurement is beginning to tap into business networks. To learn more on how these digital communities are transforming the function, SIG sat down with Dr. Chakib Bouhdary, President of Business Networks for SAP.
SIG: Social tools much like those used to manage our personal lives have infiltrated the enterprise. How is this changing procurement?
Bouhdary: There are officially more mobile devices than people in the world. More than a billion of us participate in social networks. Over 15 billion web-enabled devices connect us to the people and information we need to manage our daily lives. And data is exploding—doubling about every 18 months. So we are mobile, and apps on our phones and tablets give us new ways to discover and collaborate with our peers and trading partners. Just as consumers tap into social networks to keep tabs on their relatives and friends, procurement is now leveraging business networks to manage trading relationships and commerce activities.
SIG: There seems to be a complete shift in the way trading partners communicate, transact and collaborate. How are business networks driving this?
The "cloud" is allowing Procurement organizations to engage beyond their four walls with peer organizations - for benchmarking and collaborative buying - and with suppliers for new product innovations and supply chain efficiencies. Procurement organizations have long focused most of their attention on getting their own houses in order...streamlining internal transactional processes to promote efficiency, realigning organizational resources to focus more on strategic and less on tactical or transactional activities...all for the betterment of their organizations. With foundational internal platforms and processes in place, more organizations will begin utilizing the cloud to get connected outside their enterprises in a number of new and exciting ways. Cloud technologies make it easier than ever before to collaborate with external enterprises – both suppliers and their peer group. And according to Capgemini Consulting, procurement needs to rapidly shift their attention to supplier collaboration, especially early involvement in new product introduction, in order to drive innovation: "Organizations are still reluctant to involve procurement and suppliers early enough in product development and innovation. And Procurement is still viewed as a silo function with KPIs that remain focused on tactical and cost reduction activities." While 80% of more than 1,000 CPOs surveyed by Capgemini concede that suppliers are involved too late in the corporate innovation process, they recognize that suppliers contribute value beyond the products and services they provide, both in terms of the quantity, speed and agility with which they provide them:
Richard Waugh, Vice President, Corporate Development, Zycus Inc.
I recently had a sneak peek at Dawn's "President's Message" in our latest (soon-to-be-released as of this posting) InsideSourcing newsletter. In a nutshell, she talked about the fact that SIG is not just a "membership" organization, but should more appropriately be thought of as a "training" organization — a place where professionals come to learn more about the latest best practices in sourcing, outsourcing, procurement and so much more. Read her newsletter article for the many things SIG provides in the way of training — I won’t restate it all here — but I would like to expound a bit on the benefits of engaging in professional development for yourself and your team: It exposes you to the latest innovations. When you attend classes, conferences or events, you gain access to new ways of thinking. Sure, you can read about new innovations online, but the most tangible way to learn is to hear how someone has applied best and worst (more on that below) practices. You learn from other industries. At a recent SIG Summit, we had a speaker, Stephen Shapiro who extolled the virtues not of "thinking outside the box," but rather in "finding a better box." What does that mean? Well for one thing, sometimes looking inside your industry for all the answers may not be the best place to find them. If you attend a conference where many sectors are present, you might just have an "aha!" moment by hearing how people in other industries have approached, applied and solved problems. It motivates your team. Don't underestimate how important it is to provide your team with opportunities to network and learn. Sure, you might offer courses in-house, but imagine what it means to your team to give them the chance to meet peers in other organizations and hear the latest innovations.
We live in a networked economy. As consumers, we tap into personal networks to learn, share and shop better. And with increasing frequency, companies are harnessing the insights and intelligence of business networks to break down the barriers to collaboration and drive innovation and competitive advantage. Like social networks, business networks are an efficient, effective way to connect with a global network of partners and transact business. And they have fast become the defacto standard for a number of key processes, such as sourcing. But the real power of business networks lies in what goes on inside them – all the interactions, transactions and commentary, and the massive amounts of insights and data that they generate. And innovative companies are leveraging this information to move beyond simply transacting and engaging with partners in new ways that give them a leg up on the competition. Take MSC Industrial Supply Co., a leading distributor of Metalworking and Maintenance, Repair and Operations ("MRO") solutions, services and supplies to North American manufacturers. More than a decade ago, MSC joined a network to provide its customers with a fast and efficient way to find and purchase the products they needed. Today, the company is taking things to the next level, mining the insights, intelligence and transaction data that reside on the network to help its customers run their businesses with greater efficiency and effectiveness. When MSC learned that employees at one of its customers' locations had to walk a mile to get to a centralized storeroom where supply replacements were housed, it suggested they install vending machines to put inventory closer to where the work was being done. In doing so, MSC enabled its customer to save time and money, making it a more strategic and valuable partner. In their initial phase, networks were all about connecting companies so that they could buy and sell more efficiently.
Dr. Chakib Bouhdary, President, Business Networks, SAP