procurement in the digital age, transform your process

Procurement in the Digital Age

Bertrand Maltaverne

Brittany Whitmore

Since 2014 POOL4TOOL Senior Business Consultant & Product Marketing2013 - 2014 Schneider Electric, Global Indirect Procurement Tools Manager2009 - 2012 Schneider Electric, EMEA Indirect Procurement Tools & Process Manager2004 - 2009 Schneider Electric, Global Purchasing Application Manager2001 - 2004 Schneider Electric, Purchaser for Direct Materials1998 - 2001 Schneider Electric, Technical Manager

About :

The only all-in-one platform for Direct Procurement:• Strategic Procurement: Category Mgmt., SRM, …• Operational Procurement: eSourcing, Supplier Perf., Quality and Issue

Mgmt....• Supply Chain execution: Supplier Network / Portal, PO, ASN, VMI, ...

Bertrand Maltavernehttps://at.linkedin.com/in/bmaltaverne

What I think of Procurement…as demonstrated by recent stuff I wrote (personal & professional sides)

Sources:- Personal “blog” https://medium.com/procurement-tidbits- Whitepaper

https://www.pool4tool.com/cms/en/resources/whitepaper/procurementvalueengine

Why is it now or never that Procurement has to re-invent itself?

Procurement has a unique position!

PROCUREMENT

OutsideInside

P = SRM2…

Source: https://medium.com/procurement-tidbits/the-hidden-meaning-of-srm-7a4aaaa7455d#.v3z9flyu9

P = SRM2…SRM as Supplier Relationship Mgmt.

SRM as Stakeholder Relationship Mgmt.

Procurement has a unique position!

PROCUREMENT

OutsideInside

VALUE

Procurement has a unique position!

Internal and external pressures…Internal:

– Recognition & credibility (“seat at the table”)– Customer satisfaction (savings and more…)– Skills and war for talent– ...

External:– Disruptive technologies impacting supply-market– Globalization & volatility– Risks– ...

It is no “BS”! Evidence #1

Skills gap widening say CPOs in “Supply Management” - Feb. 2016Article based on The Deloitte Global CPO Survey 2016.

It is no “BS”! Evidence #2When your internal customers see you like that…

It is no “BS”! Evidence #2Then this can happen…

It is no “BS”! Evidence #3Technology transforms everything…

Including your

product!

Source:

You are here!

It is no “BS”! Evidence #3Technology transforms everything… Example of the automotive industry. It was “born” thanks to a disruptive approach!

“If I had asked people what they wanted, they would have said faster horses.”— Henry Ford

It is no “BS”! Evidence #3Technology transforms everything… Example of the automotive industry. It is undergoing constant (r)evolutions.

Electrical cars

Self-driving

carsRental

economy

It is no “BS”! Evidence #3Technology transforms everything…

Your customers change, your product changes…

So, what you need to buy changes…

Supply-markets change (3D printing, rental economy...). So, what you actually buy changes (new spend categories, new suppliers)...

Your Procurement “system” needs to cope with all of this!

Source: Roland Berger Strategy Consulting, “THE DIGITAL TRANSFORMATION OF INDUSTRY ”

A perfect storm!

Agility to maneuver!

Source: https://www.pool4tool.com/cms/en/resources/whitepaper/procurementvalueengine

The solution: adapt to always be a leading Procurement organization!

• Effective: deliver value to the entire organization (whatever it means in your context)

• Efficient: use the right amount of “resources”

• Sustainable: long-term orientation, not just short-term

Source: https://www.pool4tool.com/cms/en/resources/whitepaper/procurementvalueengine

Where do you want to be?

Source: https://www.pool4tool.com/cms/en/resources/whitepaper/procurementvalueengine

Where do you want to be?

I bet that you want to be there!

What is the “eTransformation” about?

Procurement must have a Digital Transformation Strategy!

You have to tailor the strategy to your context…

Leavitt’s DiamondEstablished by Professor Harold J. Leavitt in 1965 focuses on organizational behavior, the dynamics of organizational change and the interaction of four interdependent components found in any business: the people, the task, the structure and the technology.

Leavitt’s DiamondLeavitt’s theory says an overall strategy is vital because when change happens in any one of the four areas it affects the entire system. This diamond model might be helpful to companies introducing new technology systems to the workplace in a way that lessens stress and encourages teamwork.

A simplified version: “P.P.T.”1. People

2. Process

3. Technology

(In that order!)

People: the key to making a change happen!

WRONG APPROACH to investing in your

people!Source: dilbert.com

Talent and skill-set, not a new challenge…

The “why” is what motivates people! What is your “story”?

WRONG APPROACH to stakeholder

management!Source: dilbert.com

B2B or B2C, it is H2H!Credit goes to Bryan Kramer for coining the expression…

Suppliers, internal customers, fellow practitioners… are all people so business relationships are basically human relations!

Put yourself in their shoes! What are their needs? Their goals/objectives/KPIs? What do they value? “Customer” knowledge is key in the process to ensure the right “delivery” out of the sourcing process.

Include them! Cross-functional teams are key and a best practice to ensure adoption and compliance.

Influence them! Need standardization (when possible), TCO/TVO…

Listen to them Measure their satisfaction regarding your service, feedback is always a good thing!

For more: http://start.procurify.com/procurement-sense-magazine/

The new battle front is for Procurement to be:The customer of choice (for suppliers)The supplier of choice (for internal customers)

Procurement is about selling!Get the right approach!

The usual approach:

Thanks to project XXX that will last XXX months, you will be able to save XXX amount of time.

Let’s analyze that with 2 brains…

The usual approach:Thanks to project XXX that will last XXX months, you will be able to save XXX amount of time.

Yeah, right… As usual, promising something that we’ll not get. I know, “oversell” to

convince may work for some… but not with me!

Behavioral economists have demonstrated that a win in the future is not estimated at its right level vs. an immediate one. This means that you have a tendency in change mgmt. projects to oversell the future (gain) to compensate with the change to be done (pain).https://en.wikipedia.org/wiki/Temporal_discounting

A better approach:Thanks to project XXX that will last XXX months, you will be able to save XXX amount of time.

Today, we estimate that we loose XXX amount of time doing XXX. This is an inefficient use of our time which has to stop.

First, it’s easier for you to identify current “waste” than future “wins”.Then, people relate directly to their current situation.

Yeah, I know…It is kind of saying the same thing from another perspective…

But if people were logical, we would know it!

Process: the key to making a change sticky!

Source: dilbert.com

WRONG APPROACH to process design!

Think outside of the box!“The usual methods for boosting performance—process rationalization and automation—haven’t yielded the dramatic improvements companies need. In particular, heavy investments in information technology have delivered disappointing results—largely because companies tend to use technology to mechanize old ways of doing business. They leave the existing processes intact and use computers simply to speed them up.”

Harvard Business Review, Reengineering Work: Don’t Automate, Obliterate.

Think outside of the box!It also means beyond the border of your company, your suppliers have great ideas too!

Clearly defined and standardized processes, please!Reassessing your current way of doing things has the following benefits:• You determine, and eventually confirm, that what you do is what

you should be doing• You identify new ways of doing things to deliver even more value

Focusing on value-adding steps has several positive consequences:• By defining the value that a process step adds, you define the

business case and R.O.I. which are key components to drive compliance and change management

• Be removing steps that bring no value, you simplify your process

Streamlined process = case for change (people) + easier implementation in a tool (technology)

Avoid the “1-size-fits-all”

• Different type of spend categories,

• Different type of stakes,

• Different type of suppliers,

• …

Technology: the key to making a change

Technology is great, under certain conditions!

What are used to use…

What it looks like at work…

Digital Masters — companies that use digital technologies to drive significantly higher levels of profit, productivity, and performance — do exist, but they’re rare. […] Most firms fall short of digital mastery.

Conclusion…

Procurement is no longer… well you know…

Source: https://www.pool4tool.com/cms/en/resources/whitepaper/procurementvalueengine

Where do you want to be?

The best value for money!

Thank you!

LinkedIn https://at.linkedin.com/in/bmaltaverne

Twitter (news)https://twitter.com/@bmaltaverne Medium (blog) https://medium.com/@bmaltaverne

SummaryThe expression “digital transformation” is not just a buzz-word.Because we live in a disrupted world, Procurement has to transform itself and become a “digital master”.

This “eTransformation” of Procurement is a MUST if Procurement wants to increase further the value it deliver to the organization and, therefore, survive.

The Procurement organization of the future must be effective, efficient, and sustainable.

This requires a “global” approach to defining and executing the “eTransformation” focusing on the three pillars that are: people, process, and technology.