Procurement

Collaboration, Procurement with Purpose and the Entente Cordiale…

by Peter Smith

Last week, round 40 Procurement leaders got together in the very pleasant surroundings of the Royal Lancaster Hotel in London to talk about collaboration, and to celebrate Ivalua’s increased presence in the UK. The Procurement technology firm was founded in France in 2000 and has become very strong in the US, as well as in its homeland and other continental European countries.  Now, with their capabilities very highly rated by Gartner, Forrester and Spend Matters, the firm is pushing hard into the UK market. 

At the event, both Ian Thompson, the relatively new UK General Manager, and Franck Lheureux, the General Manager for EMEA (and you can probably guess their respective nationalities) spoke about the close links between France and the UK, although it was amusing to see the recent rugby result brought into the discussion – if you follow the sport, you will guess which of them mentioned that!  

My own contribution was to lead a discussion around collaboration. In this disruptive age, businesses must move faster and become more agile, so Procurement must respond, to this or we will become obsolete. Along with the rise of automation and AI, which reduce much of the traditional Procurement workload, these external drivers mean we must find a new role if we want to add real value. And increasingly, that means collaborative working with key suppliers who can support that need to be innovative, flexible and agile. Another major development in terms of the future Procurement role is the increasing importance of the agenda around sustainability and purposeful business, which again has relevance to the collaboration imperative.    

I was challenged in the questions about whether we can really move away from “savings” as perhaps the main objective for Procurement. Well, of course that will still matter, in certain organisations and for certain spend categories (actually not many for most organisations). But I reckon “the robots” will be pretty good anyway at that element of the Procurement job, so if we want to add human value, we need to focus elsewhere. 

Then, as often happens these days, the questions took us back onto sustainable Procurement or “Procurement with purpose”.  That includes quite a range of issues now, ranging from climate change and de-forestation to modern slavery or supporting diversity in our supply chains. But almost always, making these initiatives work requires collaboration. In fact, it often needs no less than three different types of collaboration. 

Sometimes action can be taken by the buyer that either does not affect the supplier or just requires their agreement. Putting a simple clause in your standard contract saying, “no slavery please” does not require anything other than the supplier to say “yes”. But most of the initiatives that have real value require collaboration between buyer and supplier (or supply chain). Even in the case of modern slavery, driving real change needs buyers to work closely with supply chains in a collaborative manner, not simply issue edicts. Or to take another example, if you’re looking for innovative recyclable plastics to replace less good current options, you will probably need to work closely with suppliers. 

Secondly, the Procurement function (or indeed the sustainability function, as we see many CPOs now also becoming the CSO – Chief Sustainability Officer) must engage with internal stakeholders. In particular, the budget holders in our organisations, and those like factory managers or COOs who use the products or services our suppliers deliver day to day, must support and be aligned with any initiatives if they are to succeed. 

Finally, when we look at the big sustainability issues, we are beginning to see collaboration across different firms, sometimes even competitors working together. Whether that is on plastics recycling, or initiatives to improve the lives of farmers or miners in the developing world, we are more regularly seeing multiple firms working together. 

Successful collaboration requires both softer, behavioural skills, such as empathy, listening, and judgment, but also technical capabilities around planning, project management, and data analysis. Technology is also coming into the picture here, with platforms (such as Ivalua’s) now offering support for collaborative activities, as well as traditional functionality in source to contract, purchase to pay and so on.  Technology can be a major factor to support our success as individuals, functions and as a profession, and my hope is that it can help us take these collaborative ideas forward in business to benefit our own organisations, our suppliers – and even the planet.  

 

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Author

Peter Smith

Author, and Managing Director, Procurement Excellence

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