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Procurement People: Careers, Leadership, People on the move, Talent Management
Articles in category: Leadership
What do companies like Unilever, Johnson & Johnson, Proctor & Gamble, Wilmar International and Mars have in common? They’ve all made public commitments to implement a zero-deforestation policy throughout their supply chains. With several of these announcements happening over the last few months, it’s clear that major corporations are recognizing what’s good for the environment can also be good for the bottom line.
When done right and systematically, sustainability and zero-deforestation policies lead to improved brand image and build stronger business relationships with other organizations and customers.(Read Full Article)
Relationship management is the primary skill missing from procurement teams, according to a survey.
More than half (60.3 per cent) of the 120 purchasing professionals surveyed by ProcureCon Europe, cited it as a skills gap in their organisation, followed by risk analysis (51.7 per cent), and supply chain analysis (39.7 per cent).
The poll emphasised the importance of building relationships in order to achieve sustainable success, not only internally with stakeholders but also externally with suppliers.
Roger Davies, group head of procurement at Marks & Spencer, told the survey that relationship management and influencing skills were core to ...(Read Full Article)
Procurement has a role in delivering value and smart cost reduction is about buying the products and services you need at a competitive price without exposing your business to risk or failure. If you are value driven, it goes beyond getting what is just cheaper, because cheaper in some industries could mean disaster. There’s a lot more to being a category manager than being a buyer – they need to take account of the consequences of their actions and recommendations.(Read Full Article)
The head buyer at Telkom has said he will be working with core suppliers in a “collegiate” way to cut costs by “as much as possible”.
Ian Russell, who has been CPO at the South African telecoms firm for six months, said in the past the company had “tactical and transactional” relationships with suppliers but he wants to treat them “more thoughtfully and carefully”.
In the last financial year Telkom spent R17 billion (£961 million) with around 2,400 suppliers, but 80 per cent of that spend was with 23 suppliers. Total revenues in the period were R32.5 billion ...(Read Full Article)
World-class procurement organizations outperform their peers by striving to providing unique value beyond cost reduction, including becoming a trusted advisor to the business, driving supplier innovation, and focusing on risk management, according to new research from The Hackett Group, Inc.(Read Full Article)
According to The Hackett Group’s research, world-class procurement organizations now operate at nearly 20 percent lower cost as a percentage of spend than typical companies. They also have 27 percent fewer employees.
World-class procurement organizations now generate purchased cost savings equal to more than 9x the cost of procurement, according to The Hackett Group’s research.
Recent research from The Hackett Group claims that procurement’s ability to generate big savings is declining dramatically. Despite what you might think, that’s good news.
It’s not that savings are unimportant. Of course, they’re important, and they always will be. They are a large part of what organizations expect from procurement. But, as every CPO knows, they aren’t the only things procurement can provide.
For example, in manufacturing companies, procurement can identify suppliers who can suggest alternatives to new product designs that can accomplish the design intent more cost effectively.
(Read Full Article)
Becoming a trusted advisor to the business, driving supplier innovation, and focusing on risk management are some of the ways that the top procurement organisations outperform their peers.
Research from the Hackett Group found that “world-class” procurement departments operate at almost 20 per cent lower cost as a percentage of spend than the average company. “They also have 27 per cent fewer employees,” the report said. “But world-class procurement organisations may have reached the limit of their ability to reduce costs.”(Read Full Article)
The challenge for leaders is not only to do the right thing, but to do the right thing, at the right time, for the right reason. A good leader inherently knows what the “right thing” is, and how and when it should be done.(Read Full Article)
The financial impact of ineffective procurement in Africa, calculated as value leakage, is estimated at a “staggering” $31.5-billion for the continent and $24.9-billion for sub-Saharan Africa, a recent report by professional services firm KPMG has revealed.
Although the firm believed that the role of procurement in an organisation was becoming increasingly strategic, 73% of C-level executives polled during KPMG’s ‘Power of Procurement 2.0 Survey’ did not believe that procurement added real value.(Read Full Article)
Better supplier relationship management could significantly improve company profits, with "soft" benefits offered by suppliers worth more than the value achieved from price concessions.
OEM Profitability and Supplier Relations - which is based in part on data gathered over the past 13 years from the annual Working Relations Index Study published by consultancy Planning Perspectives - found the better the relationship an automotive manufacturer has with its suppliers, the greater its profits are.
It explained the relationship “quantifies the economic value of suppliers’ non-price benefits to the OEM”.(Read Full Article)
Comparing public and private sector procurement practices isn’t an easy thing to do; both sectors operate in such different ways, with so many variables that it’s hard to conduct a like-for-like assessment.
Procurement technology is one of those points of difference. Private firms are eons ahead of their public sector counterparts in terms of processes like predictive procurement, smart data and real-time collaboration. However, there is good reason for this. The disparate nature of many public organisations means that, both structurally and culturally, it’s tough to integrate systems and gain compliance from staff around digital procurement.
One ...(Read Full Article)
Alongside our usual analysis on key category and organisational plans, we are taking a concerted look at the time management of CPOs. Recent interviews with CPOs reveals, if you read between the lines, that there are many different approaches and concerns that pull CPOs in different directions, but also that, like most of us, procurement executives and managers would be more effective if they could focus their resources on key activities.
We have seen from other surveys, most noticeably from McKinsey, how CEOs spend their time. Generally, it seems, their responsibilities are divided between many disparate activities, from strategy-setting, to ...(Read Full Article)
The report presents a comprehensive, industry-wide view into what is happening in the world of procurement and captures the experience, performance, perspective, and intentions of 273 Chief Procurement Officers and other procurement executives. As we do every year, we interview many Chief Procurement Officers (24 procurement leaders in total) to add context to this research effort. The report is available (with registration) from several sponsor sites including here, here, here, here, here, or here.(Read Full Article)
As procurement moves to focus on strategic issues, the degree of difficulty goes up dramatically. Why? One of the key reasons is internal alignment. A good example of this is the move away from focusing solely on direct spend to looking also at indirect materials and services.
As procurement moves into the indirect space, there is an increasing requirement to ’sell the benefits’ of the function to individual stakeholders who have been ‘ordering’ these goods and services for years. They will be concerned that this new initiative will cause delays, increase bureaucracy and damage functioning relationships. But the real issue ...(Read Full Article)
A recent brief by Bain on Winning With Procurement in Asia, released last December, in which they summarize the results of interviews conducted with 60 business heads and CPOs throughout Asia-Pacific, stated that while many of these business heads and CPOs report their Procurement capabilities as fair, or even good, none report their Procurement capabilities as great. Why?
According to the article, procurement teams in Asia-Pacific often (1) lack organizational support and prominence,(Read Full Article)
Historically, AP and procurement teams have operated in business silos; each responsible for certain parts of the procure-to-pay (P2P) process, but rarely cooperating as true teammates. Perhaps it’s because they come from two different worlds (one financial, one more operational), frequently leverage different technologies and solutions, often have different priorities for the organization, measure success differently, and report to different bosses that they don’t collaborate more than they do. But the fact is that they should – they co-manage a single process and can both benefit from greater collaboration(Read Full Article)
Leadership excellence is fundamental to the health and performance of an organisation. But in most cases, leadership development is a costly affair. It warrants careful consideration of what organisations hope to achieve when they invest in leadership development.(Read Full Article)
In case anyone had doubts, it’s now official that the "big data" revolution has gone mainstream: The US Postal Service is looking at big data and the analytical capabilities it promises to develop and implement its planned "Internet of Postal Things." If the Postal Service, which probably collects more data than most other organizations of any kind in the world, thinks analytics can help improve performance, there’s no excuse for the rest of us to think otherwise.
And, in fact, most CPOs share the Postal Service’s enthusiasm.(Read Full Article)
Using a cross-functional team in a strategic sourcing exercise for a key commodity is the accepted and preferred way to go, many teams having delivered successful outcomes. However, it is no assurance of improved performance. But what causes a less than successful result? Elaine Porteous asks in this month’s SmartProcurement .
Cross-functional teams (CFTs), made up of experts with different technical and functional knowledge, collaborate to solve a sourcing problem.(Read Full Article)
Everyone knows a co-worker in their firm who can’t resist boasting about how smart they are or about all the great things they’re doing. Those people are annoying, to say the least. But, in some respects, they may be onto something. If done correctly, letting the right people know about your successes can generate awareness of the value you bring, and even position you and your staff for more opportunities to perform.
There are some hurdles to overcome, though, and they relate at least partly to personality traits. CPOs - maybe you - are so busy doing their jobs that ...(Read Full Article)
Two out of three firms in Europe have a centralised travel procurement operation, compared with just one out of three in North America. A study by Egencia added frequent travellers are more likely to make their own bookings, as are travellers from multinational organisations.
It also analysed how companies can optimise these different organisational models for cost-effectiveness and traveller satisfaction. In terms of centralised procurement, Egencia said: “Companies may choose to focus on this category of bookers in their efforts to implement cost-saving initiatives.(Read Full Article)
The preceding five sections attempted to make a case for a very different procurement function in 2025. Even if only half of these predictions fully emerge, it is clear that the procurement leaders of tomorrow will have to be different people in many ways than the procurement leaders of today.
In considering this evolution, the best CPOs are already thinking about the need to change where and how they build their next generation of leaders. These changes can be summarized in the following four people dimensions.
New blood: There will be an increase in the number of educational and professional ...(Read Full Article)
The South African options for consulting in procurement and supply chain are expanding steadily. The latest entrant, Xoomworks, recently announced taking a foothold in the African market through the establishment of Xoomworks South Africa. The new consulting practice was created in conjunction with Gauteng-based The Supply Chain Partnership. In a market where the pool of procurement and supply chain talent is constantly under pressure, this new addition is good news for procurement organisations targeting large transformation initiatives or strategic sourcing events.(Read Full Article)
It’s time to get direct about indirect: businesses are leaving millions on the table. Indirect spend can represent up to 20-30% of revenues and you can expect to save 10-30% on spend through ’excellent’ procurement, but this requires the right mix of technology, people and processes.
In order to make the most of this opportunity, teams need to step up in these areas:
The focus with indirect procurement is often on procurement technology. Yet, there’s another, deeper level of specialized category tools that can provide an even stronger level of savings and quality service opportunities. Companies must ...(Read Full Article)