Career procurement professional turned author Peter Smith, MA, FCIPS, FRSA, recently joined the Sourcing Industry Landscape Podcast to lift the lid on some of the worst procurement scams in history, offers practical advice on avoiding embarrassing mistakes, and shares how to make sound, strategic procurement decisions.
If you're going back to 2019 is when you wrote the book, can you share some of their global disasters or the big stories that you included in the book back then?
When it comes to procurement failures, there are many areas, and some of them do not really understand what you're buying. And that can be something very simple, like the printing equipment the Irish government bought that didn't actually fit into the building they were putting it in. Or much more complex technology failures and so on.
But then, there are some interesting areas we perhaps don't think about so much in supply chain procurement, and I believe getting incentives wrong is a fascinating one. So, how do you incentivize suppliers to do the right thing?
And some of the failures there are clearly failures, but when you ask the question, "Well, how would you have done it, so it wasn't a failure?" those answers are not simple. Just something as straightforward as, "How do you get the incentives right for somebody running an outsourced call center for you? They're handling customer queries, doing inquiries or complaints. How do you incentivize them to work efficiently but give excellent customer service to the people calling in?
With the passing of the year, 2020 became more than a hindsight. We saw the emergence of human resilience and world leaders stepping up to shape a sense of leadership in young minds – be it in the area of politics, entrepreneurship or grassroots movements.
Many equate the COVID-19 pandemic to the 1918 Spanish flu. I see the similarities, but the impact today is much larger. Some basic statistics: Worldwide population in 1918 was ~1.8b, compared to ~7.8b in 2020 (4x larger). On mobility, estimates place ~23.5m travelers arriving on U.S. shores in 1918-19, compared to ~79.3m in 2020. Travel and military embankments were at close quarters in 1918, with distancing, tracing and lockdowns more the norm in 2020. On communication, wireless communication was the novel technology in World War I, limiting civilian communication to letters, postcards, newspapers, and some telephone and radio. Today, social media and the internet are primary communication modes today, with hand-held devices now reaching the farthest corners of the world.
With all this evolution in the area of mobility and communications, one would expect the mobilization of essential goods and services, inter- and intrastate communications, interlaced with the very basic of humanity, would be the norm of trade policies and corporate goals.
Padmini Ranganathan, Global Vice President, Product Strategy, SAP Procurement
2020 was a great year for thought leadership sharing as everyone suddenly experienced the same issues all at once. Many of the innovations and trends we saw emerge will continue to be essential as we move to 2021. To keep you informed, we bring you a round-up of the top webinars of the year!
5 Procure-to-Pay Trends to Watch in 2020
With the new year upon us, it’s the perfect time to take a look at look at the future of procure-to-pay (P2P).
Industry-leading procurement technology has one job: providing a robust yet easy-to-use system for transforming needed goods and services into value for a company so that it can excel at its own business.
To wrap up 2020, we highlight the top 10 SIG Speaks blogs of the year. From sustainable sourcing to mastering the art of negotiation, this year has been filled with thought leadership to help weather the COVID-19 pandemic.
The Guide to Understanding Category Management
By drilling down on spend categories, procurement can become established as a trusted advisor to the business. Check out our guide for a category management template to build your business case.
SIG University Certified Sourcing Professional (CSP) program graduate Anirudh Sundareshwar outlines howmanaging stakeholders is well-served via effective communication.
A generic definition of stakeholder management is “Stakeholder management involves taking into consideration the different interests and values stakeholders have and addressing them during the duration of the project to ensure that all stakeholders are happy at the end.” It is important to understand that this may not always be true, especially in projects where multiple stakeholders and personal stakes are involved.
However, it is essential to ensure that most stakeholders are happy with the project's end result or initiative you are working on. That is not accomplished only by the end result but builds up along the project's lifespan.
As we have learned, one of the most critical tenets of stakeholder management is communication. It is vital to know what to communicate to whom, when to communicate and how to communicate, especially to senior stakeholders. This is an art and not easily achievable. Even more so in the current scenario where most people work remotely and do not have the advantage of picking up cues (verbal/non-verbal) as you would have in the pre-COVID era. Stakeholder management in our world involves both internal and external stakeholders, of course.
For important initiatives, a procurement professional must invest time in building a communication strategy followed by a redesign of plans & templates to suit the virtual meeting format and eventually deploy. Since this is new to both you and the recipient, it is vital that you actively seek feedback to assess your communication effectiveness.
Anirudh Sundareshwar, Director & Head of Sourcing, BNY Mellon
It is hard to believe 2021 is at our doorstep, and while the immediate future is uncertain, the mid-to long-range outlook is virtually unknown. What we thought would be a ‘two-week’ work-from-home in March, has turned into a full-blown pandemic, and with it, the uncertainty surrounding it. Now, with a new wave of COVID-19 outbreaks breathing down our necks, tough times are here again.
As procurement professionals, we are, by nature, resilient. The toughest of times takes the strongest leadership and most innovative strategies. The pandemic and the consequences of it provided a proving ground for the often-overlooked sourcing and procurement team. Over the past year, sourcing and procurement became the lynchpin for many organizations’ survival, securing critical business and PPE-related goods and services to keep businesses afloat and employees protected. Throughout, procurement professionals were working tirelessly to create innovative cost savings and expense reduction opportunities when other departments went right to cutting staff and payroll.
At a time when the needs of the business are buoyed through critical sourcing and procurement activities, there is, perhaps, no more important function to a business.
Procurement Myth Versus Reality
Unfortunately, not everybody understands that. Many business stakeholders still think of sourcing and procurement as tactical purchasing and contract administrators, or bottlenecks that create delays in the buying process and upset suppliers. In reality, sourcing and procurement is really about negotiating critical multi-million-dollar contracts and finding the right supply chain partners to mitigate the significant risk in today’s market. Critical, not just in savings, but in the essential value and impact you have on the business.
At the time of writing this piece, I am just one of five million people emerging from the world’s longest coronavirus-related lockdown, in Melbourne, Australia. For nearly two months, I was only allowed to leave the house once a day for essential items and required to stay within three miles of my home. From takeaway meals to IT support, to doctor’s appointments, most of the goods and services I've needed have been ordered virtually. Since COVID-19 hit, I’m amazed at how quickly the world went virtual.
Along with SAP colleagues and millions of workers globally, I’ve quickly adapted to working from home – connecting with others through virtual collaboration and networking tools. Imagine my surprise, then, when I received a notification in the mail that my driver’s license needed to be updated to reflect my correct birth date, requiring me to physically go to VicRoads, the DMV for the state of Victoria. How is it possible that under the strictest lockdown in the world, with thousands of workers operating remotely, I was still required to be physically present at the DMV to confirm my birth date and identity; especially knowing that the documents required could have easily been scanned and sent?
Before the coronavirus pandemic hit, the journey to digital transformation was underway across many industries. Whether through the purchase of large-scale enterprise resource planning (ERP) offered by companies like SAP, or through individual contracts with suppliers specializing in virtual banking, e-signatures, contracts or hiring, companies have taken steps to manage their businesses digitally. This move has paid off in the current environment.
Baber Farooq, Head of Product Strategy, SAP Procurement Solutions
Before COVID-19, every industry was already seeing the impact of digitization. Mergers and acquisitions (M&A) and consolidation were increasing, innovative disruptors were raising more venture capital than ever before, and each internal function in large enterprises was strategizing on how to embrace and incorporate technology.
As the global pandemic hit, digital transformation hit the gas. The most defining effect of COVID-19 on digital transformation has been the growth of e-commerce penetration: e-commerce adoption grew more in the last six months than it has in the prior 12 years. Industries are fundamentally redefining themselves. New consumer behaviors and habits are forming, and the value chains of the market are permanently shifting.
While digital transformation promises a great challenge, it also promises significant opportunities. In our conversations with leading executives across the Finance, Procurement, HR and IT departments – one recurring theme has been made abundantly clear: to capture this new emerging value, an agile and robust talent strategy will be necessary.
Resetting Contingent Workforce Strategies
It’s time to hit the reset button on contingent workforce strategies! Age-old strategies were already under pressure pre-COVID-19. In a post-pandemic, hyper digitized world, organizations cannot revert to outdated techniques. New strategies and boundaryless thinking are required to reconstruct a more sophisticated, agile and robust workforce.
Romeen Sheth, President & Scott Fraleigh, Chief Product Officer
Strategic relationship management and governance (SRMG) in the absence of a strong operational framework can be challenging in the best of times. As we are all too aware, these are not the best of times. Over the past six months, we have faced enormous challenges; the speed of change and the need for quick decision-making is unprecedented.
As the world struggles to recover and our workplaces, global supply chains, manufacturing and logistics cautiously rebound from the first wave of the COVID-19 pandemic, we are grappling with what the future holds. Our strategic relationships will require flexibility and scenario planning that incorporates significant uncertainty as we face challenging times ahead.
Partnerships between clients and service providers are being tested like never before. These partnerships require an SRMG framework that adapts quickly to change. You should identify pain points as well as processes or services that must be added or changed to accommodate shifting priorities and workplace requirements.
The pandemic raises many critical questions that must be addressed as we consider what the workplace of the future will look like, and strong SRMG will be essential.
Here are a few critical questions to consider:
Does your contract with your strategic partner have the flexibility you need in the current environment?
Every business has had to adjust during the pandemic. Is your contract holding you to an agreement that doesn’t make sense in the current environment, or requiring your partner to perform in a way that doesn’t suit your current needs? It may be time to renegotiate a new contract that has the flexibility that you and your strategic partner require.
Rajeev Karmacharya is Head of the Strategic Sourcing and Category Management group at Fannie Mae. Rajeev leads a team of category management, sourcing/contracting and supplier operations professionals managing $4.5+ billion in external spend. He is a member of the SIG Advisory Board and was a featured presenter at SIG’s virtual SIGnature Event that took place in September 2020. Virtual SIGnature Events are free to all qualified buy-side practitioners and sell-side members.
What role does procurement play when it comes to transitioning employees to a work-from-home environment?
I would argue that procurement is a key enabler for several reasons. Many of us have been working from home now for several months. If you think about what was needed for a seamless transition to a work-from-home model, technology and digitization come to mind. Procurement has had a role to play in the acquisition of these technologies and ensuring there are appropriate controls and SLA’s to mitigate any potential performance issues.
Procurement has been an early adopter in implementing solutions such as digital signature, which has seen broader adoption across the enterprise in a work-from-home environment. Specific to the procurement function, approval workflows built into our source-to-pay solutions have enabled our business stakeholders to review and provide necessary approvals electronically.
On a more tactical level, our procurement team worked to ensure that office supplies and peripherals needed to work from home effectively could be ordered online via our procurement portal to be shipped directly to our employees’ homes. Our Category Managers negotiated deals with technology and office furniture suppliers so employees could take advantage of our volume leverage.
Rajeev Karmacharya, Head of the Strategic Sourcing & Category Management, Fannie Mae.