In this fourth and final installment in this Keynote Series, we talk about the "judicious deployment" of emerging technology without losing sight of the human side of digital transformation.
To achieve this "balance," Mattress Firm's VP of Indirect Procurement, Quave Burton, discusses the importance of motivation through employee recognition while challenging her team to "stretch themselves" to learn new and better ways to achieve strategic objectives.
For Quave, the journey of transforming procurement at Mattress Firm started at ground zero.
When I say ground zero, there wasn't a procurement department when she started working with the company. As she explains it, she was immediately on a transformation journey, starting with getting the right people to do the right things.
Fortunately, and with the full support of senior leadership, the organization was ready and willing to make changes.
At this point, I think it is essential to stop and stress the benefits of having to build the foundation for procurement transformation, starting with people before introducing technology. As anyone who has been in our industry for some time will tell you, in the past traditional ERP-based procurement initiatives have generally failed to achieve the expected results. Many studies estimate that the failure rate is between 50% and 75% - some even put that number higher.
The three main reasons for this less than stellar performance are poor User Experience, data inaccuracy, and analytics.
Despite introducing more advanced and intuitive "by-the-drink" technology solutions, CPO's dissatisfaction with digital initiatives remains high.
At the heart of that urgency is assessing and then mobilizing your procurement team’s digital capabilities throughout the extended organization.
How do you mobilize your procurement team’s digital capabilities?
With this third article from the 2022 SIG Procurement Technology Summit Keynote Series, I will share with you the "key insights" from Chris Kee (VP, Sourcing and Procurement at Northwestern Mutual) and Colin Frazier (VP – Solutions at ZIP) keynote on creating the right digital experience.
To better understand what creating the right digital experience around your team's procurement process involves, you must first understand your organization’s procurement workflow.
What Is The “Procurement Workflow?”
When asked, "what does the term procurement workflow really mean to you,” Northwestern’s Kee indicated that it does more than encompass the process for supplier onboarding. Kee believes the workflow process involves all critical end-to-end touchpoints, including reviews and signoffs. It also provides total stakeholder transparency to address company risk and privacy, legal, and data security requirements.
Furthermore, procurement professionals can't only be involved in the transactional process, which has traditionally been the case. Beyond managing the process from start to finish, procurement professionals also need to be capturing stakeholder engagement feedback to best manage the supplier relationship post-contract.
In the last article, we heard from Senior Vice President & Global Chief Procurement Officer at Cigna Express Scripts, Tony Abate, regarding his steps for dealing with inflation.
In this article, we hear takeaways from a recent CPO Roundtable discussion from Michael Koontz, VP, Strategic Sourcing & Business Leader for American Tire Distributors (ATD) Sourcing Solutions. I think you will find his approach to battling inflation innovative and unique.
Before we get to Michael’s fight-inflation strategy, let’s first provide some background information on his company. ATD operates more than 130 distribution centers, including 24 in Canada, serving close to 80,000 customers across North America. Employing 4,000 associates in the U.S. and 600 north of the 49th, ATD offers an “unsurpassed breadth and depth of inventory, frequent delivery and value-added services to tire and automotive service customers.”
Their selection as one of Forbes’ 2021 America's Best Mid-Sized Employers and the reception of a Gold Stevie® Award in the Transportation Company of the Year category of the American Business Awards® provides testimony to their high level of service and success as a company.
An Innovative Model
According to Michael, inflation is “five times more difficult for small businesses.
In this second article from the 2022 SIG Procurement Technology Summit Keynote Series, we will tap into the expertise of an esteemed panel of industry leaders who will share their experiences with mobilizing their respective organizations' ESG initiatives to achieve progressive outcomes. Make particular note of the words progressive outcomes because implementing and maintaining an ESG strategy is not a destination but an ongoing journey that requires commitment and the agility to respond to ever-changing marketplace realities.
Rather than just a generalized or conceptual discussion on ESG, these individuals delivered personal and detailed accounts regarding the successful transformation of their supply chains to align with social imperatives and financial objectives. In other words, during the discussion, they effectively "blazed" a trail of understanding that can serve as a helpful roadmap for the successful implementation of your organization's ESG strategy.
No Longer An Option
In the recent Oliver Wyman article, Powering Your Sustainability Strategy Through Procurement, it is clear that the proactive implementation of a successful ESG strategy is not an option for organizations – not that it ever was.
The authors specifically talk about how "For many years, calls have been getting louder for business leaders to pay more attention to their organization's environmental, societal, and governance (ESG) strategy."
Fueled by "intensifying pressure" from all directions, including customers, employees, investors, and governments, good intentions must now materialize into tangible outcomes sooner rather than later.
In what will be the first of several articles on the 2022 SIG Procurement Technology Summit Keynote Series, I will share with you the insights from each session, starting with today's post on my discussion with Shashank Saxena, General Manager for VNDLY - A Workday Company.
In the session - aptly titled "Closing The Digital Acceleration Gap In Procurement," Shashank and I talk about the disruptive approaches and new innovations that will reshape how procurement leaders can satisfy their most pressing strategic imperatives.
A little background information is in order before getting into the above specifics.
The New Digital Imperative
"Everyone wants to do digital transformation – think of all the board level priorities you have this is probably the most and biggest."
The above words by Shashank resonated with me on many levels.
They are a reminder of how far we have come over the past few years and how we still have a way to go before we achieve or realize the full potential of the digital promise.
What do I mean when I say "the full potential" of the digital promise?
A December 2019 Forbes article reported that "70% of companies either have a digital transformation strategy in place or are working on one." However, recognizing the importance of having a digital strategy is not the same as realizing the anticipated return as "only 7% of companies have fully implemented their digital transformations." As you can see, there is a notable difference between having a strategy and the ability to implement it successfully, and it is quite a gap to bridge.
One of the significant advantages of the Sourcing Industry Group (SIG) is that members have unparalleled access to industry insights and expertise through our vast and diverse community of practitioners and thought leaders.
Recently we conducted interviews with two senior procurement executives regarding their innovatively practical approach to dealing with inflation and its impact on supply chains.
In the first instance, we talked with Tony Abate - Senior Vice President & Global Chief Procurement Officer at Cigna Express Scripts.
When Cigna closed its $67 billion acquisition of Express Scripts in December 2018 to become what the media called a “$140 billion revenue healthcare colossus,” Tony’s responsibilities expanded considerably.
Responsible for “transforming and integrating two procurement departments into a global, world-class international team, he is accountable for the CIGNA taxonomy research, analysis, and development, including identifying 8000 suppliers with an annual spend of $4.5 billion.
Our second executive is Michael Koontz. Michael is the VP Strategic Sourcing & Business Leader for ATD Sourcing Solutions, whose unique approach to battling inflation we will discuss in a follow-up post.
Creeping Into Supply Chains
Shortly before his interview with SIG, Tony gave a speech to 1500 employees at Cigna on inflation and its impact on supply chains.
A timeless saying is that "life is 10 percent what happens to you, and 90 percent how you react to it."
I was reminded of these words when I recently read the PBS News Hour articleHow the supply chain caused current inflation, and why it might be here to stay.
According to reports, the 6.2 percent increase in prices over last year was unexpected and, therefore, a shocking turn of events to many experts. Even more troubling is that there is a growing belief that higher consumer prices will become the "new normal." In short, while the rate of inflation may nominally fluctuate over the coming months, its fastest rate of increase in "more than three decades" is a trend that will likely continue in the coming years.
I intend to understand the "why" of what is happening and highlight the consequences of the current crisis - including the means and tools at your disposal to deal with it.
Supply Chain Mess
While there is no single reason for the inflation we are experiencing today, it seems that the catch-all reason given by experts is that our supply chains are a mess.
Starting with the "severe shortages of goods and labor in supply chains," pundits point to a dramatic increase in people buying online due to the pandemic as an exacerbating factor.
For example, industry projections that orders would hit 4.7 million packages a day during this recent holiday go well "beyond what the system can possibly absorb or deliver." However, that is just one part of the story, which brings us back to my opening comments about our reaction.
When The Chips Are Down
The strained relationships between buyers and sellers due to inflation are making headlines around the globe.
Anyone that has ever worked for SIG has heard me say that if we are going to fail, fail fast. And over the years, we’ve tried and failed at more than a few things. Truth be told, I don’t mind failing as long as we use it as an opportunity to learn and grow.
Fail Fast and Learn
I learned this lesson in my earliest days with SIG in 2008. We were coming to the end of my first Summit as the CEO and it had been an amazing week. For all intents and purposes, it had gone flawlessly. The speakers were incredible…the content was cutting-edge…the dialogues were advancing the industry…the property was beautiful…and our partnership with the hotel had been nearly perfect. I could not have been more excited by the energy from the event and was looking forward to capping it off with a bang during the final night.
I knew from personal experience…and from Agi (a beloved longtime colleague who had been with SIG since it was founded) that close to half the delegates – most of them providers – usually leave before the final night’s celebration, so it was an opportunity to relax a bit more with the practitioner members.
We had a beautiful evening planned for the smaller group. Buses were available to shuttle everyone to an offsite restaurant in Newport Beach, where we had local delicacies and signature cocktails ready for all. Or so we thought.
In my excitement, I spent the entire week hyping the final evening. I mean, of course I wanted people to stay, why wouldn’t I? (Side note: now very few people leave early because the surprise entertainment is always worth waiting for, so as you plan for our next in-person Summit this fall, arrange your travel plans accordingly!)
To be able to see where you’re headed, you’ve got to look back at where you’ve been.
I just looked back at my December 2019 blog post and I was spot on, but for all the wrong reasons. I predicted that we would continue to elevate the role of strategic sourcing, broader adoption of technology, and a focus on upskilling sourcing and procurement teams.
I did not predict that a global pandemic would make the world talk about “supply chains,” albeit with a focus on toilet paper, Clorox wipes and a shortage of personal protective equipment. People came to realize that strategic sourcing professionals were the heroes who protected their sources of supply or quickly adapted to secure new sources.
While the pandemic continues to rule our lives in one way or another, we still see shortages on components for home gym equipment, bicycles and even casters for home office chairs. So, while some supply chains still have issues, many industries are experiencing a boom year and outpacing sales over any year in the past.
Looking back at the news of this year, many of us vaguely remember the Australian bushfires, and I distinctly remember racing go karts when news broke that Kobe Bryant died. I know some people were distracted by Prince Harry and Meghan Markle walking away from the royal life and Parasite swept the Oscars. This was all immediately non-news and forgotten quickly when the pandemic became a reality. (Personally, I am glad of one “trend” that did not last through the pandemic, which was padded shoulders and puffy sleeves.)
SIG’s Global Executive Summit is where forward-thinking procurement leaders come to experience pioneering trends grounded in today’s new realities. It provides a dedicated space for you to network with industry thought leaders, learn from different perspectives, and keep pace with emerging developments in strategic planning and procurement technology, all of which are essential to inform the way we work.
Taking place October 13 to 15, this Summit isn’t just a three-day-long webinar, it’s a live event! Everyone who attends will come away with data-backed insights and actionable resources. Sourcing and procurement leaders are continuously being shaped by new developments in contract management, remote work, sustainability, stakeholder buy-in and third-party risk management.
The keynote addresses and breakout sessions will directly address these trending topics and more:
Contract Lifecycle Management
Many sourcing bottlenecks are the result of poor contract management practices. Digitizing and automating the process, from initiation to award and renewal, can expedite the process and enhance compliance.
In my conversations with practitioners and procurement leaders, this topic comes up frequently. You can expect sessions that focus on executing complex negotiations to the role that advanced technologies like Artificial Intelligence and Machine Learning play in managing the lifecycle of contracts.