cips republic of ireland summer event...leading global excellence in procurement and supply cips...
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Leading global excellence in procurement and supply
CIPS Republic of IrelandSummer Event
“Innovation in Procurement”Sponsored by Hays
Eoin Lonergan, FCIPS Branch Chair, Matt Lowe, MCIPS Vice Chair, Byron Smith, MCIPS Secretary, Barry Finn, CIPS Dip Events Officer
Dates for your diary: Autumn Event - Sept 18th
AGM and Xmas - Nov 27th
Leading global excellence in procurement and supply
2© 2016 CIPS Group CEO
Agenda18:00 Event registration and refreshments
18:45 Welcome by Branch Chair Eoin Lonergan FCIPS
19.00 Innovate or Evaporate ! Ross McCarthy – ISME & Keystone
19:20 Automate or be outsourced ! Alan Phelan - Sourcedogg
19:50Blockchain and procurement –friend or foe!
Alan Bermingham MCIPS- Exertis
20.10 Panel Q&A -Speakers joined by Eavan O’Halloran (Dunnes) and Josh Grant (Hays)
20:30 Drinks and networking
21:00 Event close - approx
Leading global excellence in procurement and supply
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“The Voice, the Standard”
The largest global professional body in Procurement and Supply- Offices on 4 continents in 6 countries- Community of >120,000 in more than 100 countries with Branch Network- Monthly print and PDF magazine
The global standard for the profession- Mandated by sovereign countries, multi-lateral agencies and multi-national companies. Recepient of major grant from Bill Gates Foundation
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The only prof P&S body to degree level, independently regulated - Comprehensive Education Syllabus constantly updated (2019) with own Text Books
-Multiple entry levels including apprenticships
The leading voice of the profession - www.cips.org - c1.3 million annual users- Purchasing Managers Index ((PMI) is official economic indicator in UK
THE INNOVATION IMPERATIVE FOR BUYERS AND SUPPLIERS
Ross McCarthy
June 2019
CIPS Dublin
INNOVATE OR EVAPORATE
Complex organisations are locked into disruptive, market driven change
Interconnectedness, globalism and automation are the key drivers of this
New technologies are emerging and disappearing at breakneck speed
The labour force is changing as are its values and expectations
There is competition for resources in all directions
Ireland skipped the industrial revolution but this means it has a lop sided economy – we don’t make many things
Brexit is exposing the dependence on the UK manufacturing base to plug gaps in our economic model
The domestic supply base is weak on a relative and comparative basis to peer states
Huge challenges are here now (climate change, aging society, automation etc.)
CREATIVITY VS INNOVATION
Creativity is the process of creating something new that has value.
Innovation is the process of creating something new that has value to an individual, group or organisation.
Without a focus on creating and innovation, organisations cannot adapt and get left behind – overwhelmed by the kinds of challenges outlined on the last slide.
The 4 P’s Approach
CreativityProcesses (techniques) along with personal and group creativity1Organisational CultureSystematic emphasis on identifying possibilities2Innovation4 tyoes of innovation: product, process, marketing and management3
MINING FOR INNOVATION
Product
Innovation
Marketing /
Comms
Innovation
Process
Innovation
Management
Innovation
Idea is to generate new
products & services or
improvements to existing ones.
Idea is to improve the efficiency
and effectiveness of existing
processes in an organisation.
While this focuses on
marketing mix in business, it’s
really about communications.
Emphasis is on improved
management systems to
improve overall outcomes /
results.
REALITY CHECK 1: ARE WE THE PROBLEM?
Buyers
• You cannot expect anything other than modest, low impact improvement if your organisation is dysfunctional
• Organisations like Musgraves, Glanbia and Diageo to name three work with suppliers to develop them over years
• This attitude develops aptitude and increases the knowledge and synergy necessary for high impact, value adding, adaptive change
Suppliers
• Would they recognise innovation if they were bludgeoned into a stupor with it?
• Don’t go fishing in a dry ditch – focus on suppliers that are committed to progressive practices.
• It’s a combination of push and pull techniques – you may need both.
• If risk appetite is very low, you will only achieve what you can get from contract negotiations.
BIG CHANGE VS EVOLUTIONARY CHANGE
• It is exciting to talk about major change but that is not where the focus will typically be for buyers.
• Big Change is typically rare. The much bigger opportunity lies in every day contract management and supplier relationship management.
• This said, some techniques from Big Change work regardless of the size of the actual proposed change so we will briefly look at two models.
A METHOD FOR ELICITING INNOVATION1.$Cura3ng$innova3on$(2/2)$
• This$is$a$model$for$innova3on$development$–$there$are$innumerable$models.$This$is$one$that$is$fit$for$purpose$for$this$conversa3on.$$
Idea$Genera3on$ Solu3on$development$ Idea$Advancement$
Exis3ng$Business$Model$
New$Business$Models$
Open$Innova3on$
Op3on$value$
Strategic$Value$
Exit$value$
End$solu3on$meets$
requirements$
Sustainable$solu3on$
Technically$
Feasible$
Ideas$ Ac3ons$
Form$Hypothesis$ Experiment$ Implementa3on$
A TECHNIQUE FOR DELIVERING INNOVATION
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• This technique is called Design for Six Sigma – there are many, many techniques.
THE ROLE OF PROCUREMENT IN THIS CYCLE
• Procurement practitioners must act as internal providers of value added services capable of delivering change through structured purchasing processes and through strategic contract management techniques.
• In compliance/commissioner models, you may have to accept your impact is dependent on the cultural mindset.
• In buyer led models, it is down to the procurement function to lead this with the internal customers.
WHEN AND HOW
• It should be specified in the tender documentation
• You can be specific about the need for a process
• Typical approaches tend to focus on the “lucky bag” approach
• You could be more prescriptive and seek (for instance) Kaizen workshops as part of the contract price
• It may mean that some extra expenditure creeps in but you’ll have a better chance of explicitly generating practical value add changes
• Ensure the contract management process matters
• Price only contracts can limit the opportunity for added value as margins are often very tight
• For contracts with a higher quality rating, it can often be the case that the actual contract management element gets insufficient attention and weighting
• Frequent supplier reviews with issue management and continuous improvement as standing items generate potential opportunities for improvement / enhancements to current requirements
During the Tender Process During the Contract Management Process
UNLOCKING VALUE IN
CONTRACT MANAGEMENT
(1/2)
• Use supplier review meetings well
• Use the procurement rules to your advantage (e.g. around R&D)
• Don’t be afraid to crack out the wallet if it is worth it
• Use the salami technique, repeatedly, until you get push back
UNLOCKING VALUE IN CONTRACT MANAGEMENT (2/2)
• Prioritise options generated for implementation
• Use evidence and where required formal business cases to generate a case for change and internal support
• Be open with the supplier(s) and give them a chance to show what they can do
• Collaboration is key – you will need to input into the process, if you want to get outputs from it
REALITY CHECK 1: DO YOU WANT THIS?
Buyers
• Many organisations simply want to squeeze until the budgie croaks it
• If there isn’t engagement, fairness and commitment to a process of generating improvement / change, it is pointless
• Humans instinctively lie through their teeth – most people dislike change
Suppliers
• Most suppliers will do what suits them, if anything, left to their own devices
• If challenged, you may need to give the suppliers suggestions and/or work with them to identify how changes can be delivered
SOME EXAMPLES OF BUYER-LED INNOVATION
Phased approach to ERP Replacement Project
We are working with an Irish manufacturing client who need to replace their ERP system. We were engaged for a private sector technology tendering project by them.
They weren’t ready and our estimates showed we could save them up to €400,000 by doing the process mapping and wireframes before commissioning the ERP (whichever platform). We have undertaken all this work for them as part of the procurement prep and spec process.
An implementer will be hired for programming and rollout only – saving significant resources for the client.
SOME EXAMPLES OF BUYER-LED INNOVATION
Inventing a Quality Management System
This is an active scenario in the public sector for specialised transport services. The Contracting Authority is unhappy with the supply options they have at present.
We are planning a supplier development programme where a process is designed and certified to Q-Mark or ISO9001 standards for a transport process. It will be bespoke.
New supply options will then be encouraged. This will provide existing suppliers a chance to improve and give new supply options a benchmark to align upon. It will be third party certified.
SOME EXAMPLES OF BUYER-LED INNOVATION
Hybrid model for value creation
The lucky bag approach is dependent on suppliers. CA’s are often ill equipped to prioritise the most beneficial change.
Consider deploying a specialist internal or external resource to deliver high impact value creation on prioritised identified opportunities.
Their role is to act as a mentor / advisor / coach to the Buyer and the supplier. Sometimes, you’ve to spend money to make money / savings.
Leading global excellence in procurement and supply
20© 2016 CIPS Group CEO
Agenda18:00 Event registration and refreshments
18:45 Welcome by Branch Chair Eoin Lonergan FCIPS
19.00 Innovate or Evaporate ! Ross McCarthy – ISME & Keystone
19:20 Automate or be outsourced ! Alan Phelan - Sourcedogg
19:50Blockchain and procurement –friend or foe!
Alan Bermingham MCIPS- Exertis
20.10 Panel Q&A -Speakers joined by Eavan O’Halloran (Dunnes) and Josh Grant (Hays)
20:30 Drinks and networking
21:00 Event close - approx
INNOVATION IN PROCUREMENT
CIPS ROI Branch, Summer Event
26th June 2019
Alan Phelan, CEO
Co
ntract
Register &
Alerts
Supplier Master
Data
Knowledge Base
Contract Management
Supplier Relationship Managemen
t
Guided Buying
Strategic Sourcing
OUR FUNCTIONALITY
WILL YOUR DEPARTMENT BE OUTSOURCED?
ARE YOU AUTOMATED?
CLOUD COMPUTING GROWTH
E A S Y TO A U TO M AT E
• P ro c e d u r a l
• Tr a n s a c t i o n a l
• Re p e a t a b l e
• D a t a A n a l y s i s
D I F F I C U LT TO A U TO M AT E
• St r a t e g y
• P ro c e s s I m p ro v e m e n t
• I n t e r p re t a t i o n
• Re l a t i o n s h i p s
www.sourcedogg.com
https://www.linkedin.com/in/phelanalan/
THANK YOU
Leading global excellence in procurement and supply
28© 2016 CIPS Group CEO
Agenda18:00 Event registration and refreshments
18:45 Welcome by Branch Chair Eoin Lonergan FCIPS
19.00 Innovate or Evaporate ! Ross McCarthy – ISME & Keystone
19:20 Automate or be outsourced ! Alan Phelan - Sourcedogg
19:50Blockchain and procurement –friend or foe!
Alan Bermingham MCIPS- Exertis
20.10 Panel Q&A -Speakers joined by Eavan O’Halloran (Dunnes) and Josh Grant (Hays)
20:30 Drinks and networking
21:00 Event close - approx
Blockchain: Application to Procurement Functions
Alan Bermingham – Blockchain Lead
Exertis
www.exertis.ie
www.linkedin.com/in/berminghamalan
A member of one of the largest and fastest growing technology
distribution & supply chain management businesses in Europe
In business for over 30 years
$3 billion turnover per annum
Access to 21,000 resellers across Europe
Who We Are
Part of DCC plc,
a FTSE 100 company
with combined
annual sales of
over $16 billion
Exertis SCS is a leader in materials supply chain design &
operation. Delivering cost, capital & complexity optimisation
for our global clients
six continents
Where We Are
global operationsWe have and spanningpartnerships
Blockchain Project Overview- Disruptive Technology Innovation Fund
• A consortium led by Exertis has secured
Irish Government funding to support its
'Blockchain in The Technology Product
Supply Chain' Project with 1.65 mil euro
budget.
• Partners: University College Dublin and
Sonalake
• Exertis will build a platform for
technology product distribution using a
permissioned (B2B) Blockchain.
https://youtu.be/hB8Csv6thf4
DTIF Overview
Blockchain v Traditional
Traditional Commerce
• Each party in a trading relationship has a set of books,
or ‘ledger’ (An ERP system e.g. SAP)
• Parties exchange information (e.g. PO’s) via email,
portals, EDI & web-services. The individual ledger’s
remain separate.
Blockchain Concept
• One ledger: shared/ replicated
• Distributed and immutable manner.
• Transactions are recorded on the ledger and cannot be
altered.
• Rules of what transactions are allowed. Consensus
mechanism.
• Automated Transactions: ‘smart contract’.
Blockchain – Features and Benefits
FEATURES
• Transparency
• Connectivity
• Automation
• Traceability
• Security
• Tokenisation
BUSINESS BENEFITS
• COLLABORATION (INTERNAL &
INTER-COMPANY)
• PROCESS / OPERATIONAL
EFFICIENCY
• SHORTER LEAD TIMES
• REDUCE FRAUD & COUNTERFEIT
• NEW COMMERCIAL MODELS
Current Integration
Model
Blockchain
Model
3PL
Component
Manufacturers
4PLs
Finished Good
Manufacturer
DistributorsSub-Component
Manufacturers
Resellers
Customer
3PL’s
Customer
Reseller
Distributor
Finished Good
Manufacturer4PL
Component
Manufacturer
Sub-Component
Manufacturer
What will the transformation look like..?
What does blockchain potentially offer..
ManufacturesOEM
Distributor
Reselle
r
Warranty & Repair
Service
Order
Order
Consumer Order
Ships
Ships
Ships
Receives Registers Serial
Registers Serial
Registers Serial
Registers Serial
Receives Checks Serial Repairs/ Refurbs
Supply Traceability Ensure Authenticity Product Lifecycle Analytics Shared Visibility
Platform will provide…
• Orders & Shipments
data
• Product Serial
Numbers Tracking
• Usage (IoT Data)
• Rich Analytics
The Complexity of
Procurement and the
Blockchain Use Case
Due Diligence
Smart Contracts
Visibility in the Supply
Chain
Automation – Ordering /
Payments
Application to Procurement Activities
So what is next…?