John Burgess, Innovation Director at Balloon One, discusses the ongoing issue of food waste and how it affects the supply chain
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The UK’s food system is entering a new era of accountability. Initiatives such as the UK Food and Drink Pact, which aims to reduce food waste by 50% per person by 2030, are increasing pressure on businesses to address waste across the supply chain. Similarly, the upcoming Mandatory Weekly Collections in England show a clear expectation that both households and businesses will be expected to treat food waste as a systemic issue, not as an afterthought.
For businesses, there is a clear incentive for reducing food waste. UK food and beverage businesses lose an average of 12% of their fresh or perishable stock every year, equating to more than £156,000 per business, and over 100 tonnes of food discarded each year. Reducing this waste doesn’t just prevent financial loss; it also improves profit margins, strengthens supply chain resilience, and enhances sustainability credentials – all increasingly valued by customers and investors alike.
Consumers are seeing empty shelves and rising prices in shops, but they don’t often see the behind-the-scenes. Reducing food waste in the UK starts way before food hits the shelves. To tackle the issue effectively, we need to look at the heart of the supply chain – the warehouse – where products are stored and sent for distribution. Of the supply chain businesses we surveyed, 7% attributed stock loss to internal issues – such as over-ordering, poor stock rotation, and handling errors. Right now, the food waste problem can’t be solved with outdated processes or generic warehouse management system templates. In a sector defined by speed and perishability, even small inefficiencies are unsustainable.
One-size-fits-no one
Food supply chains are physically different from most other industries. They vary by distance, structure, temperature, demand model and end customer.
By distance, this ranges from local farm networks supplying regional retailers, to more complex global routes for nationwide supermarkets. Some food and beverage suppliers are centralised through national distribution centres, others distributed across regional hubs. They also operate across different temperatures – from frozen, to chilled, to ambient – often all kept in the same facility. Demand models shift between push and pull with seasonal changes, serving everyone from major retailers and restaurants to direct consumers.
Yet many distributors are still sold “out-of-the-box” warehouse management systems. These are one-size-fits-all solutions that are designed for industries with more stable inventory and predictable distribution.
It’s no surprise then, that waste production is still rising. Our Out of Date research, which surveyed 500 supply managers across the UK, shows outdated warehouse technology and poor systems integration are now among the leading drivers of food loss, with 37% of supply chain managers citing legacy systems as the main cause. Many warehouse systems still used today were last upgraded nearly six years ago, with many businesses still relying on manual operational processes. When technology doesn’t reflect operational reality, teams inevitably create workarounds — and those workarounds cause errors, inefficiencies and ultimately waste.
From operational cracks to reputational damage
Warehouses have moved on from being back-office infrastructure. They now sit at the centre of reliability and competitive advantage. A fragmented warehouse environment causes severe fragility across the supply chain.
When outdated and disconnected warehouse technology meets the often-found operational pressures of the food industry, cracks become visible. Deliveries are missed, stock spoils before it’s dispatched and compliance risks increase as items become less traceable.
These aren’t just isolated operational issues – when incidents happen in food warehouses, they reduce supplier margins, can damage retailer relationships and undermine overall customer trust. 27% of supply chain managers say food stock losses have harmed their company’s reputation, while 20% report that these system failures have negatively affected customer relationships.
Customisation is the competitive advantage
What’s needed is deeper integration between warehouse management systems and wider supply chain technologies that businesses rely on. When businesses work best as part of an end-to-end connected system, linking workforce management systems with forecasting and inventory management, they gain the real-time visibility and control needed to reduce waste and respond to changes in demand.
Integration reduces initial fragmentation, and then long-term advantages come from customisation. In practice, this may look like voice-directed picking that reduces administrative errors. Some warehouses may require smart trolleys that improve movement across large facilities, while others may need modular automation that changes with demand. Seamless integration between ERPs, conveyors and packing lines can then be used to remove friction from goods ready to be dispatched.
Food supply chains must be designed around the realities of the specific perishable goods, variable weights and demand volatility. Reduced waste, improved order accuracy and greater operational resilience can then be achieved.
Pragmatic innovation that protects the food economy
The future of the UK’s food economy will not be secured by templates or temporary fixes. It will be built in connected, data-driven warehouses designed around the realities of perishable goods. Businesses need to start at the heart of the supply chain if they are to solve the UK’s food waste problem.
Businesses that take a pragmatic approach to integrating and modernising their warehouse systems will be better equipped to balance efficiency, resilience, and sustainability as regulatory and consumer pressures grow.
Delphine Perridy, Chief Commercial Officer at Envirotainer, explores the challenges posed by cold chain breakage and how to build a more resilient system
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Often overlooked, the global pharmaceutical cold chain plays a vital role in delivering some of the most critical healthcare breakthroughs of our time. From life-saving vaccines to advanced cell and gene therapies, many of the medicines patients depend on are only effective if kept within strict temperature ranges from the moment they leave the manufacturing site to the moment they reach the patient.
When this chain breaks, the consequences can be serious. Temperature fluctuations can lead to spoilage, reduced efficacy or even the complete loss of a shipment. Beyond wasted product, the ripple effects can disrupt treatment schedules, undermine patient trust and create significant financial and environmental costs. As therapies become more sensitive and supply chains more complex, the margin for error is shrinking – and the need for controlled, secure cold chains is only growing.
The scale of the challenge
Today, an estimated 40–60% of all pharmaceuticals require temperature-controlled logistics to maintain their safety and efficacy during transport and storage. As the world’s population ages and chronic diseases become more prevalent, the demand for advanced, temperature-sensitive therapies is accelerating. By the end of this decade, biologics, gene, and cell therapies are projected to make up a significant portion of the pharmaceutical pipeline, with nearly all requiring strict temperature control (2).
Yet, despite these advances, 12% of pharmaceutical shipments still experience temperature excursions – incidents where products are exposed to conditions outside their safe range. For vaccines, the challenge is even more acute: according to the World Health Organisation, up to 50% of vaccines are compromised each year due to failures in temperature control and logistics. These statistics underscore the urgent need for robust cold chain solutions to protect both patient safety and business outcomes.
Why cold chain failures matter
Cold chain failures can happen anywhere along the journey – on the tarmac, in transit or during last-mile delivery. The most common causes are temperature fluctuations, delayed transport, handling errors and exposure to extreme environmental conditions. Even short deviations can render sensitive products unusable. Despite these risks, knowledge about cold chain vulnerabilities and the frequency of temperature excursions remains limited across the industry. Many ground handlers, airports, and even some logistics providers lack adequate training and awareness, leading to preventable errors and product losses.
The consequences are significant. Each year, an estimated $35 billion is lost due to cold chain breakdowns. When the chain breaks, the consequences are profound: patient safety is compromised, public trust is eroded, and the financial and environmental costs can be staggering.
A more fragile landscape
The pharmaceutical supply chain has always been complex, but new therapies are making it even more so. Cell and gene treatments, for example, often need to be kept anywhere between -60°C and -150°C, and their delivery timelines are measured in hours, not days. Each shipment is unique, and the path from laboratory to patient must be seamless. Any deviation can mean the loss of an irreplaceable dose.
Climate change, geopolitical instability, and disrupted trade routes add further uncertainty. Even minor temperature deviations of just 1–2°C can significantly degrade sensitive products like biologics, vaccines, and insulin, affecting their safety, stability, and effectiveness. Each link in the chain faces new challenges in maintaining the precise conditions that medicines demand.
In addition to this, the regulatory landscape continues to evolve. Authorities are tightening standards around data integrity, traceability and temperature monitoring. The expectation today is full, end-to-end control, not just of shipments, but of the data that underpins them. Pharmaceutical companies are under growing pressure to prove not only that products are safe, but that every stage of the journey can be validated and verified.
These trends are driving a shift from passive logistics to active, risk-aware management. It’s no longer enough to react when something goes wrong. The most forward-thinking organisations are focusing on prevention and designing their supply chains to anticipate risk before it occurs.
Building resilience through prevention and collaboration
Resilience has become the defining measure of a modern cold chain. While passive packaging solutions can be cost-effective for short distances, they offer limited temperature control and are highly susceptible to delays, extreme weather, and handling errors. In contrast, active solutions, equipped with real-time monitoring, deliver precise temperature control and greater reliability. These systems are the preferred choice for high-value, long-distance, or ultra-sensitive pharmaceutical shipments where product integrity is paramount.
Modern cold chains are increasingly proactive rather than reactive. Organisations are leveraging real-time monitoring, predictive analytics, and early-warning systems to anticipate potential failures before they can occur. These tools allow logistics teams to track shipments minute by minute, identify potential changes, and intervene before product quality or patient safety is compromised.
But technology alone is not enough, it must be used in conjunction with collaboration. The pharmaceutical cold chain is a shared ecosystem, involving manufacturers, logistics providers, carriers, packaging specialists and regulators. Each plays a critical role in ensuring that therapies arrive safely and on time.
The real cost of getting it wrong
When the cold chain fails, the consequences extend far beyond the warehouse. A single temperature fluctuation can undo months of research, thousands in investment, and most importantly, a patient’s chance at treatment.
As the pharmaceutical landscape evolves, resilience will increasingly define success. The companies that prioritise prevention, invest in innovation and collaborate across the ecosystem will be best placed to make sure that the next generation of therapies reaches patients safely, wherever they are in the world.
Because when the cold chain breaks, it’s not just products that are lost, it’s trust, opportunity and sometimes lives. Keeping that chain intact has never been more vital.
Jeremy Vianna, Vice President, Strategic Growth at Nearform explains how AI-native engineering (AINE) is rewriting software creation.
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Agile is no longer the differentiator it once was. In fact, it’s now table stakes, with nine in 10 organisations practicing it.
Agile originally emerged as a response to the rigid, adversarial Waterfall model, replacing years‑long requirement gathering and disappointing final releases with rapid iteration, continuous learning and tight alignment between business and technology. By the mid‑2010s, agile thinking spread beyond software into the broader enterprise, becoming a baseline practice, rather than a competitive differentiator – most teams now use it, differing only in execution quality.
Because Agile inherently keeps teams moving in the right direction through constant feedback, the real shift today isn’t about methodology, but about what AI‑native engineering introduces: a new step‑change in capability. Just as early adopters of Agile once dramatically outpaced those on Waterfall, organisations who adopt AI‑driven engineering practices can achieve a similar – but far greater – velocity advantage, amplified by machine‑speed iteration rather than human‑speed process.
The next competitive edge isn’t about how you run ceremonies, it’s about how you produce software – and that’s changing fast. AI-native engineering (AINE) is rewriting software creation. It’s not about using AI as a bolt-on, but instead as a new means of production for intelligent organisations.
The impact of this shift is already visible: early enterprise adopters of AINE report a 20% productivity lift across development and service functions, and some engineers adopting coding assistants noticed their productivity increase by 10-20%. That’s before you even account for agents and closed-loop learning.
What is AI-native engineering?
AI-native engineering is all about using AI tools to create AI solutions – resulting in systems that are built from the ground up, and designed to scale, with AI. The agents execute governed tasks, while the AI-native architecture compounds performance over time, ensuring the system keeps improving.
As an example, at Nearform, we recently embedded governed agents inside an AI-powered cross-product search for a global pharma client. This enabled usage to feed the adaptation of prompts, retrieval and policies. Naturally, relevance improved instantly. But the biggest impact was seen in the discovery timeline, which compressed from six weeks to just two, and the AWS infrastructure came up in minutes, instead of weeks.
But why is this relevant now? Because enterprises aren’t struggling with model accuracy anymore, they’re struggling with operationalising AI at scale. Most companies still haven’t been able to move pilots into measurable production value, only 26% have the capabilities to move beyond proof of concept, and 74% are still failing to realise tangible AI value. AINE is the missing operating model.
The new innovator’s dilemma
Unlike previous delivery models, AI-native engineering introduces compounding velocity. This means automated code generation and tests reduce release cycles from weeks to a matter of hours. Governed AI agents run multi-step workflows, keep context inside the system and reduce rework and handoffs. Meanwhile, continuous evaluation pushes improvements back into prompts, retrieval and policies.
Early AI-native engineering systems may look ‘worse’ on legacy control metrics, as they’re packed with unfamiliar governance paths. But AI-native startups, unburdened by process debt, adopt AI-native engineering from day one – driven by smaller, senior teams supported by streams of governed agents. This immediately results in higher velocity and less waste – and as tooling and methods mature, cost advantage and learning loops become an insurmountable advantage.
McKinsey’s State of AI report evidences this, showing how most organisations are still experimenting, while a minority of high performers – who are redesigning workflows – are realising outsized value.
Failing to adopt AI-native engineering risks the AI-edition of the innovator’s dilemma – protecting today’s governance and delivery model, while tomorrow’s competitors compound away from you.
AI-native engineering erodes yesterday’s moats
The old moats were legacy codebases, hard-won internal knowledge and proprietary data. AI-native engineering attacks each of these.
With AI-native engineering, automated refactoring and code generation significantly drop the cost of rebuild vs. maintain – eroding the value of legacy codebases. Similarly, copilots and agents encode decision history, meaning internal expertise becomes portable across teams, instead of being trapped inside handoffs. And the proprietary data advantage is narrowed by foundation models and synthetic data. In fact, foundation models already encode massive general knowledge, meaning smaller players aren’t starting from zero anymore.
We’ve also seen institutional knowledge become more portable. In the pharma use case above, copilots and agents codified decision history and evaluation criteria into the system, meaning context is able to travel with the work.
The barrier to high-performing systems is collapsing. It’s no longer about “who owns the most data” or what you’ve built – it’s about how fast you’re able to learn and improve.
The measurement problem nobody wants to admit
Currently, most CTOs trying to prove AI’s value are measuring the wrong things. Velocity, story points, lines of code, etc, are all proxies for human labour – friction points getting in the way of progress. When you move at machine speed, these measures collapse to zero. What actually matters is whether AI is solving the problem, not how fast a human would have solved it.
Agile teams often ask the business for time, trust and a year of dedicated resources, so they can ship iteratively, learn continuously and ultimately, deliver the most valuable outcome – without knowing upfront exactly what that will be. Finance however, works on annual planning and wants clear commitments on cost, scope and ROI at the outset, creating a long‑standing tension between agile delivery and fiscal predictability. Traditionally, software engineering could bridge this gap because it relied on decades of experience, solid estimation models and deterministic systems.
But AI-native engineering’s value is compounding. It’s not just seen in sprint velocity, it’s seen through the reduction of rework cycles, the acceleration of the second and third release after the first, and the rate of technical reduction debt over time. These are harder to measure in the short-term, and therefore often easier to dismiss – which is precisely why many organisations stay trapped in pilots. Not because the technology failed, but because large delivery models and metrics aren’t designed to capture compounding value, making it difficult to justify the next investment.
The CTOs realising true value aren’t necessarily those with the best agents, they’re the ones who started by instrumenting their workflows before introducing AI. This gives them a genuine baseline to measure against, meaning ROI conversations become more of a demonstration than a negotiation.
A pragmatic path forward
Start with a thin-slice in production: pick a workflow that has real P&L impact as a starting point. Then ship a governed agent and closed-loop evaluation and measure against the baseline.
Build the AI-native engineering backbone: introduce governance as code into the workflow, embed evaluation into CI/CD, and centralise shared memory to preserve context and knowledge across teams.
Reshape the talent mix: create senior-led pods that combine domain leaders with engineers who are fluent in agents, retrieval and testing automation.
Scale by compounding: each release becomes a reusable capability, which you can use to grow horizontally over time, into adjacent workflows.
AI-native engineering moves beyond bolting AI-features onto existing workflows, towards changing how you build. While Agile made delivery scalable for almost every organisation, AI-native engineering makes it compounding.
The organisations that internalise that now will set the pace for the next decade. The rest will be catching up… at human speed.
By Jeremy Vianna, Vice President, Strategic Growth, Nearform.
CPOstrategy spoke with some of the key speakers and leaders in attendance at DPW in New York… From AI and operating models to talent and strategic influence, procurement leaders gathered with a shared message: the profession isn’t simply adopting new technology, it is redefining what procurement itself should become
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The theme of DPW New York 2026 – Recode – could hardly have been more appropriate. Across conversations with procurement leaders representing industries as diverse as financial services, media, pharmaceuticals, luxury retail, technology, industrial manufacturing and commercial real estate, one message emerged repeatedly: procurement is entering the most significant period of transformation in its history.
Artificial intelligence may dominate the headlines, but for practitioners leading transformation programmes inside global organisations, the conversation has already moved beyond the technology itself. Instead, attention is turning towards operating models, organisational design, talent, governance and the role procurement will play as businesses navigate increasingly complex commercial environments.
Rather than viewing AI as the destination, many see it as the catalyst for fundamentally redesigning procurement.
For several of the speakers CPOstrategy spoke to, ‘Recode’ wasn’t simply about software, it was about rethinking the function from the ground up.
Rina Patel, SVP – Chief Procurement Officer at Versant Media, described the company’s recent spin-off from Comcast NBCUniversal as an opportunity to reshape procurement into a trusted advisory function involved in deciding whether initiatives should happen in the first place, rather than simply executing purchasing decisions.
Others echoed that sentiment. Danielle Salyers, VP for Strategic Sourcing & Enterprise Contracting, at Allied Solutions, who has built procurement organisations from scratch on multiple occasions, viewed the theme through the lens of establishing entirely new operating models. At Semrush, VP for Global Procurement Alejandro Fernandez is living through a different kind of recode as the company’s procurement organisation becomes integrated into Adobe, forcing a rethink of how teams, processes and technologies come together.
Despite the different business contexts, the conclusion was remarkably consistent: procurement’s traditional operating model no longer reflects the realities of modern business.
Beyond Cost Savings
If there was one topic that united almost everyone we spoke to, it was the growing belief that procurement has outgrown its historical identity as a cost-cutting function.
Savings remain important, but few leaders now see them as sufficient for measuring success.
Patel argued that procurement should instead be judged on whether supplier decisions generate genuine business value, improve return on investment, enable revenue and support broader organisational objectives. Salyers similarly described cost savings as an output of procurement rather than its defining purpose, pointing instead to resilience, supplier strategy, risk management and business enablement as the measures that matter most.
Mercury’s Head of Procurement Bobbi Bachynski perhaps captured the changing mindset most directly. Working in a fast-growing fintech business, she sees procurement less as a savings function and more as business development tool, measuring success through the speed at which the organisation can launch products, enable teams and support growth.
That broader definition of value reflects the changing pressures organisations face today.
From geopolitical instability and tariffs to ongoing supply chain disruption, procurement has increasingly become central to helping organisations manage uncertainty. Angela Zou, Chief Procurement Officer at Cushman & Wakefield, noted that global disruption has elevated procurement’s importance within executive discussions, while Marc Behring, Director – Procurement Excellence at Messer Americas, explained that procurement’s ability to respond quickly to changing market conditions has become just as valuable as negotiating favourable contracts.
The profession is steadily moving away from being measured purely on how much money it saves towards how effectively it enables organisations to operate.
AI Starts with Better Processes
Despite the excitement surrounding artificial intelligence throughout DPW, one point generated almost universal agreement. AI cannot repair broken procurement.
Again and again, the executives we spoke to stressed that organisations must first simplify processes, improve governance and clean their data before expecting technology to deliver meaningful transformation.
Fernandez described AI as a magnifying glass that simply exposes existing weaknesses. Deploying sophisticated technology on top of poor-quality processes only embeds those problems more deeply into the organisation.
Others used even stronger language. Salyers warned that “if you automate chaos, you just get chaos faster,” while Zou argued organisations must “clean house before you automate or optimise”. Bachynski cautioned against allowing excitement around AI to distract organisations from building strong procurement foundations, preferring what she described as a measured and intentional approach rather than chasing hype.
Several leaders also highlighted the importance of data quality.
Behring believes that process and data remain the essential foundations for successful AI adoption because intelligent systems can only generate meaningful outcomes when they are built on structured, consistent information. Without that foundation, organisations risk investing significant time and money only to conclude that AI itself has failed, when the real issue lies in poor underlying processes.
The message from DPW was clear: successful transformation begins long before organisations deploy their first AI agent.
Humans Remain at the Centre
Although AI dominated almost every conversation, none of the procurement leaders we spoke to suggested technology would replace human expertise. Instead, the future appears to be one of partnership.
Routine, rules-based and transactional work is increasingly expected to migrate towards automation, freeing procurement professionals to focus on judgement, creativity, negotiation, supplier relationships and strategic decision-making.
Fernandez believes relationship management and stakeholder trust remain fundamentally human activities. Salyers described the ideal future as automating repeatable work while preserving human involvement wherever judgement, ethics and commercial trade-offs matter.
Sandeep Dhar, Senior Director – Center Global Category Management Leader at Johnson & Johnson, sees the operating model evolving into one where AI agents perform tactical activities while procurement professionals concentrate on strategy. Sean ParkVP – Procurement, AP & Transformation atArm similarly views AI less as a replacement than as a decision-support capability, enabling procurement teams to analyse suppliers, identify strategic partners and generate insights more rapidly than traditional reporting tools allow.
A Different Kind of Procurement Professional
As technology changes, so too does the profile of the procurement professional.
Several of the leaders we spoke to suggested that tomorrow’s procurement teams will require fundamentally different capabilities from those traditionally associated with category management and sourcing.
Fernandez believes the rise of large language models will reduce dependence on narrow category specialisation, instead rewarding analytical thinkers, creative problem-solvers and builders who are comfortable experimenting with new technologies.
Behring agreed that procurement professionals will increasingly need to understand how AI works, develop stronger technology skills and continuously adapt as new capabilities emerge. For him, the challenge extends beyond technology itself to identifying what the future procurement skillset should actually look like.
That evolution also requires organisations to rethink how they develop talent. Zou spoke about freeing procurement professionals from routine work so they can build stronger judgement and advisory capabilities, while Dhar argued that curiosity, continuous learning and asking better questions will become defining characteristics of successful procurement leaders.
Several executives also highlighted the importance of confidence. Patel encouraged procurement professionals at every level to become bolder, understand the businesses they support more deeply and build the commercial credibility needed to influence decision-making. Rather than waiting to be invited into strategic discussions, procurement leaders should demonstrate why they belong there by speaking the language of growth, revenue and business outcomes.
Technology is Changing, but Leadership Matters More
Despite AI dominating conference agendas, many leaders suggested that technology alone will not transform procurement.
Leadership remains the decisive factor. Gary Levitan, VP – Head of Procurement at Louis Vuitton, argued procurement earns influence through a compelling vision rather than software. Digital tools may strengthen procurement’s ability to execute, but they do not secure executive credibility on their own.
Others made similar observations. Several leaders stressed every organisation faces different priorities, making it dangerous simply to copy another company’s technology roadmap. Bachynski warned against benchmarking blindly, arguing that procurement functions should be designed around the unique commercial realities of their own businesses rather than following industry trends.
For Park, transformation succeeds when stakeholders understand the entire journey rather than experiencing disconnected process changes over time. Bringing employees into the transformation early, explaining the bigger picture and managing change carefully are just as important as selecting the right technology.
That emphasis on governance, communication and organisational change repeatedly surfaced throughout our conversations. AI may accelerate procurement, but successful implementation still depends upon people understanding, trusting and adopting new ways of working.
Why DPW Matters
While technology formed the backdrop to almost every conversation, many attendees described the greatest value of DPW as something far more human. Connection.
Time and again, these leaders spoke about the opportunity to compare experiences with peers facing similar challenges, distinguish genuine innovation from marketing hype and learn from successes as well as failures.
Fernandez described the event as an opportunity to separate “signal from noise” by hearing directly from practitioners rather than relying solely on vendor demonstrations. Zou highlighted the value of seeing collaborative customer and supplier transformation stories while building relationships with peers on similar journeys.
For Bachynski, DPW represents procurement’s “Super Bowl”. Not because of the product demonstrations, but because it creates opportunities for honest conversations about what is really happening inside organisations. Those candid exchanges help procurement leaders avoid repeating mistakes while accelerating successful transformation.
Others shared similar experiences. Behring pointed to the importance of understanding how peers are deploying AI and evaluating emerging technologies, while Park noted discussions with fellow procurement leaders often proved just as valuable as conversations with software providers. Dhar reflected on DPW’s rapid growth over recent years as evidence that procurement itself has become a far more influential discipline than it once was.
Perhaps the strongest message came from Salyers, who described DPW as a place where people challenge conventional thinking, inspire one another and return to their organisations better equipped to lead change.
Procurement’s Defining Moment
Although each executive represented a different organisation, industry and stage of transformation, they revealed an unusually consistent picture of procurement’s future.
The function is no longer content with measuring success purely through cost reduction. Instead, procurement leaders are redefining their role around business enablement, resilience, commercial insight, supplier innovation and enterprise growth.
Artificial intelligence will undoubtedly accelerate that evolution, but only where organisations first establish strong processes, clean data and effective governance. Automation will increasingly handle transactional work, allowing procurement professionals to concentrate on the uniquely human capabilities that technology cannot replicate: judgement, relationships, creativity and strategic thinking.
The challenge now is not simply adopting AI. It is recoding procurement itself.
That was the unmistakable message running through DPW New York 2026. The organisations that succeed will not necessarily be those deploying the greatest number of AI tools. They will be those prepared to rethink operating models, develop new skills, redefine success and position procurement as an indispensable strategic partner to the business.
For a profession long associated with purchasing and cost control, that represents a profound shift. If the conversations at DPW are any indication, procurement’s next chapter has already begun. And this time it is writing the code rather than simply following it.
Sara Malconian, Chief Procurement Officer at Harvard University & Jim Bureau, CEO of JAGGAER explain how ESG & the Circular Economy is changing the evolution of procurement.
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We speak to Sara Malconian, Chief Procurement Officer at Harvard University and Jim Bureau, CEO of JAGGAER to see how ESG and the Circular Economy is changing the evolution of procurement…
Sara, how have you seen your role evolve as a procurement leader over the years as ESG and supplier diversity come into focus?
Procurement leaders have gone from ‘cost cutters’ to ‘problem solvers’ within their organisations. Our core mandates used to be to drive cost savings and efficiency. We were hyper-focused on getting the most out of the organisation’s spend and supplier relationships. Those priorities haven’t gone away, especially in today’s inflationary environment, but the expectations of the procurement function are significantly higher and broader today.
Procurement functions saved their companies during COVID and the confluence of disruptions that followed. We showed we are a strategic linchpin. We are now looked upon to drive value and impact and strategically guide our organisations to achieve broader goals, including diversity and environmental, social, governance (ESG). Internal stakeholders realised the benefits of procurement and sought help with advancing their department’s agendas or solving their challenges. We listen to their needs, allocate the right resources, and ultimately enable them and the overall organisation to be successful.
I’ve been in procurement for over 20 years, and I can honestly say you’d be hard-pressed to find a more rewarding and exciting career. Procurement professionals have a real opportunity to make a tangible difference within their organisations, communities, and the world through the way we source products and services.
What is Harvard doing to have a positive impact on society? Can you share some examples, Sara?
Across the Harvard community, students, alumni, faculty, and staff are advancing scholarship and teaching on the world’s most significant challenges, and everyone wants to do their part to address inequities. Supplier diversity and inclusion have been a priority for Harvard for years, but we wanted to make even more of an impact and really invest in the growth and development of diverse businesses, especially as the pandemic highlighted inequities and disparities within our communities.
In 2021, we formed the Office for Economic Inclusion & Diversity (OEID), which is dedicated to reaching out to diverse suppliers, giving them opportunities, and providing them with tools, training, and resources to be successful. The office also encourages the use of underrepresented business enterprises (UBEs) in the purchasing of all goods, services, and construction at Harvard and standardises procurement practices with these businesses across the university.
We’re proud of the work this office is doing. We’re actively training suppliers on Harvard’s policies and how they can work with us. We’re creating a central location for them to access bid and RFP opportunities. UBEs can also apply to be mentored by Harvard Business School students.
We’ve created a dashboard to track and analyse spend with diverse suppliers across all of Harvard’s schools and measure progress over time. Everything we’re doing is aimed at increasing spend with our existing diverse suppliers, as well as the number of diverse suppliers that work with Harvard, and helping these suppliers grow their businesses.
Jim, why is prioritizing ESG and supplier diversity important and what steps can companies take today to progress in their journey?
Beyond being the right thing to do, investors, boards, regulators, customers, and employees now expect organisations to prioritise ESG and diversity initiatives and walk the talk. There’s also a clear business impact. Supplier diversity drives competitive bidding processes that lead to cost savings. Working with partners who are sustainable and have different ideas and perspectives fuels innovation and creates a competitive advantage. Sourcing from a sustainable and diverse supplier pool also reduces risk by broadening organisations’ access to multiple resources for various materials, products, and services.
One of the most critical steps companies can take to progress on their ESG journey is to make it clear to suppliers that environmentalism is a priority for their organisation. They will attract suppliers with higher levels of ESG maturity and provide suppliers who are earlier on in their ESG journey with sustainability toolkits and training to help educate them on eco-friendly best practices and sustainability innovations.
This step avoids having to overhaul their supply chain to account for ESG. Strategically managing suppliers by leveraging third-party data, scorecards, and supplier audits are crucial for understanding the ESG risks that suppliers pose and minimizing disruptions by working with them to correct these issues.
Successful supplier diversity programs start with a top-down culture shift. If a company’s culture isn’t diverse, inclusive, and supportive for all its stakeholders, they won’t be able to drive supplier diversity in a meaningful way. Supplier diversity strategy should map back to company goals and include an executive-level champion to sponsor the program internally and help bring in the resources they need.
Outside of leveraging technology to identify diverse suppliers and build a program, businesses can talk with people who have been in their shoes. They can collaborate with like-minded companies at industry events, engage in relevant LinkedIn groups, and connect with organisations such as the National Minority Supplier Development Council.
Once diverse suppliers are on board, organisations can create a supplier diversity policy that clearly outlines how many diverse suppliers need to be invited to bid for each event to ensure teams are executing on the strategy. Leading supplier diversity programs go beyond simply spending with diverse suppliers to providing mentorship and training them on how to respond to RFPs correctly, as well as creating environments where it’s easier for them to engage.
Jim, what role does technology play in helping organisations achieve ESG and supplier diversity goals?
Technology is a key enabler of ESG and supplier diversity initiatives. One of the biggest obstacles to supplier diversity and ESG is a lack of reliable supplier data. Suppliers don’t always keep their information up to date in self-service portals. The data procurement teams have isn’t always enriched to the level they need, with insights on diversity status, certifications, and proof of ESG compliance.
Researching and assessing suppliers is tedious and time-consuming, which leads many organisations to skip the verification step. Without this information, organisations don’t have a true picture of the inclusivity and sustainability of their supplier network, which makes it impossible to identify the right partners to source from to meet their ESG and supplier diversity goals and make an impact.
Technology addresses this challenge by automatically collecting, enriching, validating, and integrating the supplier data needed to obtain this level of supply base visibility and make decisions that drive ESG and diversity. AI-powered tools are available to match buyers with specific diverse suppliers who also have the capabilities to help drive ESG objectives and meet broader procurement criteria.
Software that segments the supply base and helps visualise spending with small and diverse suppliers across a variety of classifications is critical for setting benchmarks and measuring progress and ROI.
Jim and Sara, how do you expect the ESG and diversity conversation to shift and where should procurement leaders focus for the future?
Sara: I expect we’ll see the conversation shift to emphasise measurement. It’s not enough anymore to say you’re committed to ESG – you need to prove it and show demonstrable progress and ROI. Maintaining the momentum on ESG initiatives is hard. Technology is key for setting benchmarks and goals, ensuring accountability for hitting key milestones, and measuring progress and return in a credible way.
Jim: In a declining economic environment, choices inevitably need to be made. I expect the conversation around ESG will center around where companies can focus to maintain progress on ESG initiatives as financial and economic pressures come to the forefront. While some companies may need to scale back in some areas to preserve cash and resources to navigate a downturn, I’d advise them to be careful about slowing ESG down too much as it will be much harder to catch up to current levels after the economy bounces back.
I’d argue that when ESG is done right it can be a strategic lever for navigating a down economy, saving organizations money and resources, driving innovation, and helping them achieve broader business objectives and resilience.
Here are five of the best procurement schools in Europe.
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As procurement becomes an increasingly vital and strategic function within many organisations, people are beginning to realise the full potential of turning it into a career for themselves.
This has subsequently led to many universities noticing the demand in the industry and offering courses which equip students with the relevant qualifications and skills needed to succeed in the supply chain space.
With this in mind, here are five of the best procurement schools in Europe.
1. CIPS
Course: Various Where: Across England
Run by Oxford College of Procurement and Supply, there are 10 Chartered Institute of Procurement and Supply centres in England offering several different qualification levels to choose from. The courses are recognised throughout the world as harnessing leading edge thinking and professionalism across the procurement and supply chain management space.
CIPS offers courses such as level three, four, five and six in procurement and supply with each qualification created to reflect current, emerging and best practice in procurement and supply chain management. Classes focus on exploring legacy purchasing and supply methods as well as techniques and theory to the application in a business environment.
CIPS doesn’t just offer in-person studying as courses are designed to suit individual lifestyles with virtual classrooms, part-time and weekend options to choose from.
2. Politecnico di Milano
Course: MSc in Supply Chain and Procurement Management Where: Milan, Italy
Renowned as being one of the best scientific and technological universities in the world, Politecnico di Milano offers an extensive portfolio of programmes in a variety of different spaces. Its supply chain master’s degree is a 12-month course aimed at equipping students with vital knowledge and skills needed to succeed in the industry.
The course also includes a number of practical activities in the programme such as lessons with international lectures, workshops on soft skills, company presentations, projects with companies, company visits and an international study tour in Rotterdam.
According to Politecnico di Milano, 86% of students were employed three months after graduation while 55% were also working abroad during the same period.
The course was ranked third in the TOP 2021 Eduniversal Best Masters Ranking (Global) and eighth in the QS Supply Chain Management Masters Rankings for 2023.
3. SKEMA Business School
Course: MSc (and MS) Supply Chain Management and Purchasing Where: Lille and Paris, France
Skema offers two supply chain management (SCM) and procurement masters: The premium international MSc Global Supply Chain Management in Lille taught in English, and the MS in SCM and Purchasing in Paris and Lille mainly taught in French. France’s highly-rated supply chain and procurement program has been designed with a progressive shift from theory to practice. The degree covers the entirety of supply chain activities from planning, purchasing, receiving, production, storage to delivery through nine compulsory and six elective courses.
The global MSc has a new cooperation with the leading prestigious business school, MIT in the US, plus another cooperation with Politechnico from Milano. The MSc master’s degree provides soft skills in supply chain and purchasing management as well as going into future trends in digitalisation, AI, sustainability, ethics, globalisation, risk management and agility. The course’s primary goal is to find future leaders who are seeking to make a positive impact on the world of supply chain management and procurement. The MSc is a full time program, complemented by paid internships in the area of the student’s choice, while the MS alternates weeks of classes with professionals at the forefront of their fields.
4. Audencia Business School
Course: MSc in Supply Chain and Purchasing Management Where: Nantes, France
Created in 2009, Audencia Business School’s programme will cover topics such as procurement, global sourcing and supply chain strategies. Other topics to feature includes green logistics, Big Data, digital transformation, negotiation and commercial law. The course will provide expertise from industry insiders as business executives visit and share professional insights during the programme.
The school works closely with the corporate world and is recognised for its responsible management practices. Audencia is triple-accredited, highly ranked and internationally oriented and according to its website, 79% of course graduates are employed before graduation. The course is available as a one-year or two-year master’s programme.
In autumn 2024, the course is set to be renamed to the MSc in Responsible Procurement and Supply Chain Management.
5. Cranfield School of Management
Course: MSc in Procurement and Supply Chain Management Where: Cranfield, United Kingdom
Cranfield School of Management provides students with specialist knowledge and skills in procurement needed to progress their careers
Cranfield’s Procurement and Supply Chain Management course has been co-designed with senior industry executives. This purchasing postgraduate course provides students with specialist knowledge and skills in procurement needed to progress their careers. Possessing one of the largest facilities in Europe, the course places considerable emphasis on how to overcome real-world challenges.
Students will gain an in-depth understanding of supply chain strategy and sustainability, procurement strategy, supplier selection and evaluation, negotiation and contact management. They will also be taught how to use data, models and software to solve problems and inform decisions, inventory and operations management and how to design effective supply chain operations.
Students will have the opportunity to attend a study tour and experience a different supply chain perspective elsewhere in Europe.
The course was ranked 11th in the world on the QS Supply Chain Management Masters Rankings for 2023.
This month’s exclusive cover story features Nathan Fisher, Executive Vice President, Chief Procurement Officer, at Hexion, who reflects on a global procurement vision that empowers people to make sustainable change…
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As the year continues to fly by, we continue to bring you some of the biggest stories tackling the real heart of the procurement and supply chain landscape, and this month’s cover star is a true testament to that.
Nathan Fisher, Executive Vice President, Chief Procurement Officer, at Hexion, has a story that might make you do a double take. In a world where we are constantly moving from job to job, delivering transformation projects, realigning procurement functions and moving on to the next challenge, Nathan has been at Hexion for 15 years. Why? A commitment to results, responsible procurement and most importantly – investing in people.
“I love to develop people,” he says. “I like to coach them and I enjoy watching others develop, move up and move on, and achieve success (…) Hexion knows this and truly values their leaders and they want them to succeed and they want them to stay.”
Be sure to read this incredible interview as Nathan tells us that one day he would love to pick up a copy of CPOstrategy and find one of his own prodigious talents gracing the front cover!
Elsewhere, Brish Bhan Vaidya, Head of Strategic Sourcing & Supply Chain at Uber APAC, why procurement is even more important to the ride sharing company than you think, and how it continues to drive the transformation of the business.
We examine the results of Procurious’ How Now survey on the impact of COVID-19 on supply chains, and what’s next for procurement and supply chain leaders, we have part one of a fantastic Q&A on the future of procurement, and Dave Brittain of Amazon Business tells us why procurement should be the hero in your business in digital transformation.
Unilever sets out new actions to fight climate change, and protect and regenerate nature, to preserve resources for future generations
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Unilever has set out a new range of measures and commitments designed to improve the health of the planet by taking even more decisive action to fight climate change, and protect and regenerate nature, to preserve resources for future generations. Unilever will achieve Net Zero emissions from all our products by 2039. We will also empower, and work with, a new generation of farmers and smallholders, driving programmes to protect and restore forests, soil and biodiversity; and we will work with governments and other organisations to improve access to water for communities in water-stressed areas.
To accelerate action, Unilever’s brands will collectively invest €1 billion in a new dedicated Climate & Nature Fund. This will be used over the next ten years to take meaningful and decisive action, with projects likely to include landscape restoration, reforestation, carbon sequestration, wildlife protection and water preservation. The new initiatives will build on the great work that is already underway, such as Ben & Jerry’s initiative to reduce GHG emissions from dairy farms; Seventh Generation helping Native American nations to access renewable energy; and Knorr supporting farmers to grow food more sustainably.
Alan Jope, Unilever CEO, explains: “While the world is dealing with the devastating effects of the Covid-19 pandemic, and grappling with serious issues of inequality, we can’t let ourselves forget that the climate crisis is still a threat to all of us. Climate change, nature degradation, biodiversity depletion, water scarcity – all these issues are interconnected, and we must address them all simultaneously. In doing so, we must also recognise that the climate crisis is not only an environmental emergency; it also has a terrible impact on lives and livelihoods. We, therefore, have a responsibility to help tackle the crisis: as a business, and through direct action by our brands.”
Fighting the climate crisis
Our existing science-based targets are: to have no carbon emissions from our own operations, and to halve the GHG footprint of our products across the value chain, by 2030. In response to the scale and urgency of the climate crisis, we are today additionally committing to net zero emissions from all our products by 2039 – from the sourcing of the materials we use, up to the point of sale of our products in the store.
To achieve this goal 11 years ahead of the 2050 Paris Agreement deadline, we must work jointly with our partners across our value chain, to collectively drive lower levels of greenhouse gas emissions. We will, therefore, prioritise building partnerships with our suppliers who have set and committed to their own science-based targets.
We believe that transparency about carbon footprint will be an accelerator in the global race to zero emissions, and it is our ambition to communicate the carbon footprint of every product we sell. To do this, we will set up a system for our suppliers to declare, on each invoice, the carbon footprint of the goods and services provided; and we will create partnerships with other businesses and organisations to standardise data collection, sharing and communication.
Protecting and regenerating nature
Unilever has been leading the industry on sustainable sourcing practices for over a decade, and we are proud that 97% of our forest-related commodities are certified as sustainably sourced to globally recognised standards. However, to end deforestation, we must challenge ourselves to even higher standards. This means that we need to have visibility on exact sourcing locations, and no longer rely on the mass balance system, which does not allow for accurate verification of deforestation-free when sourcing derivatives of our commodities.
We will achieve a deforestation-free supply chain by 2023. To do this, we will increase traceability and transparency by using emerging digital technologies – such as satellite monitoring, geolocation tracking and blockchain – accelerating smallholder inclusion, changing our approach to derivates sourcing, and making significant additional investment in derivative fractioning facilities.
We are also committed to working with the industry, NGOs and governments, to look beyond forests, peatlands and tropical rainforests, and to protect other important areas of high conservation value and high carbon stock which are under threat of conversion to arable land, with potentially devastating impact on the natural habitats.
In addition to continuing to drive sustainable sourcing and an end to deforestation, Unilever is setting out to help regenerate nature: increasing local biodiversity, restoring soil health, and preserving water conservation and access. To do this, we will empower a new generation of farmers and smallholders who are committed to protecting and regenerating their farm environment. Initiatives that we will drive include securing legal land rights, access to finance and financial inclusion, and development of restorative practices. This integrated approach will improve the livelihoods of smallholder farmers and give them leverage to drive the regeneration of nature.
Unilever is also introducing a pioneering Regenerative Agriculture Code for all our suppliers. The new code will build on our existing Sustainable Agriculture Code, which is widely recognised as being best-in-class in the industry, and it will include details on farming practices that help rebuild critical resources. As we have done in the past, we will make the Regenerative Agriculture Code available to any organisation that may find it useful – with the goal of driving change throughout the industry.
Unilever will also step up direct efforts to preserve water. Already, 40% of the world’s population is affected by water scarcity, and more than 2.1 billion people consume unsafe drinking water.1 We will implement water stewardship programmes for local communities in 100 locations by 2030. To do this, we will take the learnings from our Prabhat programme in India, which tackles water quality and supply risks around our factories. This programme takes a community approach to water management, and not only helps farmers across cropping seasons, but also addresses the basic human need for adequate and easy access to water. We will build a model for this water stewardship programme, and partner with key suppliers for them to also run similar programmes.
Unilever will also join the 2030 Water Resources Group, a multi-stakeholder platform hosted by the World Bank, to contribute to transformative change and building resilience in water management in key water-stressed markets, such as India, Brazil, South Africa, Vietnam and Indonesia.
Nick Pike, Chief Revenue Officer at Vizibl discusses how companies should find their new normal, build supply chain resiliency and innovation and how there are no second chances if your supply chain is not reliable.
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Innovation in procurement technology has not moved on much in the past decade, however the impact of COVID-19 and supply shortages expected as a result have certainly focused minds and shone a light on procurement sourcing. In fact, according to the UN’s Deputy-Secretary-General, Amina J. Mohammed: “Companies should focus on scaling up production, making sure supply chains are reliable.”
For many procurement and supply chain professionals, the dramatic events of the last couple of months – including lockdowns, quarantine, production stops – were a wake-up call. Following the firefighting mode during the pandemic, companies have realised that they can no longer afford to be unprepared for such an event in the future.
Building resiliency into the supply chain
Securing the supply chain to ensure that it is not negatively impacting the ability to meet customer commitments will be crucial. CPOs & CSCOs will want to know if there are any supply chain issues so they can quickly source alternative solutions. They also want to know what projects they need to prioritise following the crisis because, compared to earlier in the year, priorities have more than likely changed.
CPOs will be keen to understand what key projects they need to undertake to drive the organisation’s revenue and success. Outside of this, CPOs & CSCOs will also be looking at how to extend and enhance their supply network and how they can better understand their dependence on that network. Ultimately, short term they will be looking at how they transform their supply chain risk management processes and build in resiliency to not only survive but thrive.
To this point,Deloitte recently published an excellent overview around managing supply chain risk during COVID-19, and I would highly recommend this report to anyone involved in developing improved supply chain practices for their business.
Resiliency will be the post COVID-19 watchword
This need for resiliency provoked us to develop a bespoke version of our Vizibl Supplier Collaboration and Innovation solution (Vizibl Resilience) that focuses on the need for companies to address these issues. We expose the critical projects that customers need to work on in the supply chain and have easy to use dashboards to be able to report critical information to the Board.
It is important to ensure that everyone is sharing information in an efficient way rather than individual-by-individual via email or phone. Businesses need to have the right collaboration technology to underpin their procurement sourcing, to solve problems faster. For many CPOs working remotely with their teams, perhaps for the first time, this level of shared visibility is vital.
Vizibl Resilience ensures that all communication, actions, and results from vendors working throughout the supply chain are captured in real-time within a single, easy-to-navigate platform. Dashboards give the leadership team transparency around where the business is at in any point in time on any number of projects. This enables the organisation to identify any issues within those projects and quickly triage those that need attention.
Building supply chain innovation
Of equal importance to visibility, collaboration and control is building innovation into the supply chain.
If we look at an industry such as telecommunications and take Vodafone as an example – historically, generating revenue for the business has been very network bandwidth-orientated. Now Vodafone and its peers are required to build additional services on top of these networks, enabling them to differentiate. We are working with Vodafone looking at the new projects and innovations which are coming from their suppliers such as Huawei, Google, Nokia and establishing how Vodafone can bring those to market faster. We have been helping them to identify which ones are aligned to their business goals and how they can accelerate these projects.
Removing costly duplication
But what we have seen historically is that as companies start to do this, so duplication creeps in. Often, we find that a very similar project is happening in a different part of the organisation at the same time. By deploying Vizibl, we are able to shine a light on the duplication and show that elsewhere in the organisation there are two or three projects which are the same or very similar, which could be brought together.
While saving money is one aspect, the other aspect is about getting various project teams to collaborate and get projects to market faster.
No second chances
In just a few months, COVID-19 has triggered sweeping changes in how we all do business. This massive scale disruption created a succession of different supply chain issues. These issues are not necessarily new, but what has changed is that, going forward, not being prepared for such issues is no longer an acceptable position. With supply chains firmly in focus boards are pushing for a more proactive approach and level of insight and visibility.
Now the CEO will be asking the CFO, COO and CPO: is the supply chain prepared? During the pandemic, companies scurried to secure supply. During recovery, the CPO needs to initiate measures that lead to preparedness. They’ll be no second chances for CPOs going forward. This means being prepared must be an integral part of sourcing and supply chain management.
Black Friday is fast approaching, but retailers have been preparing for this event since last year – or they should…
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Black Friday is fast approaching, but retailers have been preparing for this event since last year – or they should have been, according to Gartner’s Vice President Supply Chain EMEA, Frank Vorrath.
“This is not the first Black Friday event,” said Vorrath, in an interview with The Digital Insight podcast. “Learn from the past: use data from previous years and look at what it tells you about the peaks and demands.”
“Black Friday is a special event, so use that data to make a prediction for the next one. This is an important consideration when it comes to your ability to respond to demands.”
“To help this, make sure your environment is prepared to collect as much data as possible throughout this event.”
Planning and making educated predictions are recurring themes when it comes to advice on making a success of Black Friday, but Vorrath is also keen to place emphasis on widespread collaboration.
“Work with your partners, both your logistics providers and your other providers such as outsourced manufacturers and suppliers,” said Vorrath.
“Consider that the activities on Black Friday will not only be about selling your products but also delivering them to your customers. When you sit and collaborate with your partners, you will have better outcomes.”
All this preparation, however, could go out the window if there’s more demand than expected.
“Consider risk mitigation. Things may happen that result in more demand than you ever legislated for, so consider increasing the risk mitigation to avoid being on the backfoot when demand over exceeds your ability to respond.”
Over cover story this month features Jill Robbins, Senior Director, Global
Procurement of Indirect Goods & Services at Elanco, the animal health
enterprise. In an absorbing interview, Robbins outlines how a procurement lens
enables smarter business growth.
“Procurement has a unique lens and insight into
all aspects of the business,” she says. “There are always going to be people
that do not understand the value of procurement… but we see opportunities and
connectivity across the value chain that others may not be able to see that
drive enterprise efficiency and productivity.”
Elsewhere, we speak to Anis Tabka, CPO at UAE
telco du to talk about the challenges to procurement transformation. “A lot of people aren’t coming from the supply chain background.
They have technology experience or administration experience and just assume
that procurement is simple price squeezing and handling of contracts,” he
explains. “I always try to tell them that there is so much more to
procurement.”
Plus, we have
articles focusing on procurement at Roland Berger and The Cost of Holding
Inventory, alongside the best events and conferences around, and the Top 5 takeaways
from the CIPS procurement salary report.
Part four of a six-part supply chain masterclass with Frank Vorrath, Executive Partner of supply chain at Gartner. Frank explains…
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Part four of a six-part supply chain masterclass with Frank Vorrath, Executive Partner of supply chain at Gartner. Frank explains how to build a supply chain excellence operating system, enabled by a centre of excellence.
Frank Vorrath, Executive Partner of Supply Chain at Gartner
One of the key things identified within your concept of a supply chain excellence operating system is two-directional thinking, where you’ve got people working in the business and people working on the business – could you elaborate on that, please?
Transformations are really driven by future growth ambitions of those organisations, or if they are looking and expanding into new areas and new business models. Lots of things are changing very fast and exponentially. If you look at that, that sets limitations for organisations to actually do the same things as they did in the past. From a structural point of view, your current capabilities won’t allow you to compete in the future. You have to think about how you are going to approach that.
There’s also a limitation in terms of resources. The concept of perform and transform is simple to understand, which means you still have to focus on your core business and create results and good performance, while at the same time transforming. The concept is almost like running a sprint and a marathon at the same time. If you think about what you can do with the same setup and structure you have without investing, and potentially a different set of excellences, then it’s probably stretching your current resources to a limit.
If you think about the transform activity you
have to do as an organisation, you think more about what you need to do to be
successful in the future. If you think about the sprints, you still have to
focus on your core business and on day-to-day good performance, and you also need
to think about what enables you to perform day to day, running these sprints,
making sure you keep and stay focused on delivering performance end results to
your business and to your customers as well meeting their objectives and needs,
but also transforming the organisation at the same time and building the new
muscles you need in the future related to the capabilities.
What sort of
challenge does this balancing act, between the two areas, present?
If you do that with your current resources you have available in your business you may find yourself in a position that is too much a stretch for your resources: to be able to deliver on your expectations. Somewhere, you need to balance it. The question is can you balance that with your existing resources and the existing structure you have, or perhaps you have to set up a different structure – where you have people working in the business and people working on the transformation. Both are equally important to you as a business because one is really keeping the lights on and delivering the performance you need today, which is finding the capabilities you have to build for the future. That needs to be balanced. Is it easy? Probably not. But is it required? Absolutely.
Where does
change management come into the equation?
With change management and transformations, it’s really shifting the mindset and the behaviour and actions towards generating more an improved and sustainable business performance and results. It’s about having clarity of the destination, and a clear understanding of why are you doing this, and what you want and need in order to transform.
The next important part of change management is role modelling. Your leadership plays such an important role here in championing the transformation with clear and defined specific communication and milestones. Taking people along with you on this journey and having an understanding of ‘walk the talk’, and being visible and aligned on a leadership level creates the pull in an organisation.
There’s also organisational capabilities, the resources I need, the financial commitment that an organisation has to make to transform, because it can be dependent on the maturity of that organisation. Sometimes you have to be able to invest first to generate the benefits later on. You have to be able to have governance in that model, which is strictly focused on priorities for the business as an outcome and is steering the organisation through that transformation. The culture and the mindset of the people, the knowledge and skills have to be in place, and it has to be somewhere measured and sustained.
Also, you have to be able to reinforce. How do you align your goals and objectives and your incentives structures on the two important activities, perform and transform, in a balanced way? Not just incentivising generating results today, but also incentivising transforming the organisation to be able to compete in the future. It’s not just continuous improvement. It’s building an operating system, considering what drives change, creating push and pull in an organisation, and really with the mindset of the future to improve, as well as building muscle, creating sustainable business performance and end results, and meeting the never-ending customer expectations in future.
How does a
role model approach help overcome the challenges in change?
It has to start at the top of an organisation, which means you have to be very clear, very concise and compelling. People need to understand why you are doing this, and be very clear about the outcome, when you want to do certain things, and what it’s actually going to do for the organisation. Take people along the journey and bring them in a way in that they have a stake in the game, so they are able to participate and provide their input into the transformation. That’s really important when you start your change management and transformation.
You also have to somewhere create an excitement
factor for your people to believe that the future you’re going to create for
them is a future where they want to be part of, where they want to be proud of,
so they are excited to actually take you as an organization forward into that
future.
How do you
bring the customer into the conversation?
It’s key to incorporate customers into it. Don’t
be shy in asking your customer how can you serve them better. How can you
create more a collaborative joint partnership together? It’s no longer about
vendor and supply and customer relationship, it’s about a partnership on a more
strategic level. As a business, if you’re able to figure that out and bring
your key customers in, listen to them and make them part of it, or even make
them a joint development in terms of building an operating system, even better.
You may want to consider joint investments into building the capabilities you
need in future, especially in areas when it comes to looking into talent related
to emerging technologies, data, data scientists, etc.
You really have a scarcity and you have to build and think about how you want to build these kinds of talents in your organisation from a different perspective and different ways. You may want to do this jointly together with your customers, because they probably have the same needs like you have in their own business, and the same kind of limitation and challenges to find the right talents. Instead of just doing it on your own and being completely internally focused, combine the inside out with the outside in. The key in that is your customer or your customers.
How
important is it to develop an end to end supply chain IT strategy and
technology roadmap so that the technology and the procurement transformation
are aligned?
You have to have an end-to-end view of your technology. Technology can’t be seen in isolation with what you are trying to accomplish with the strategic objectives of your business related to the value proposition you have. Technology and digitalisation, you can be taken from two angles and that’s what I’m seeing currently happening in the marketplace. On the one side, you see companies focusing and creating new business models through digitalisation related to their products and services, selling outcomes and solutions instead of selling products and devices.
On the other side, you see a lot of activity in terms of digitalisation in the supply chain. These two things are connected, but we also know that 70% of the initiatives currently in the marketplace are disconnected. Technology is creating new business models, using data to access and provide insights to your business for better and informed decision making. Data could also mean monetising that data and creating new business models. Technology, from your business process optimisation point of view, can create a new level of maturity in terms of efficiency.
That’s where a lot of companies are focusing on and deploying new technologies because they want to figure out if there are business benefits they can introduce to the business and to harness new capabilities and with automated processes that reduce time, errors, cost, and also increase the efficiencies they have in their business. To be able to do that, you need to have a blueprint and an understanding of where you are at currently with your technology landscape and your applications, and also where you want to grow in the future.
What is the overall journey of this centre of excellence system, where it starts with developing infrastructure, building supply chain excellence capabilities, and then reaching a stage where that supply chain excellence is woven within the organisation’s DNA?
The ideas of transform and perform, and the
resource constraints that organisations are having by using the same resources
has been recognised in the market widely and you have seen over the last couple
of years more and more organisations actually building a centre of excellence.
With a centre of excellence, you have to consider that there are different
centres of excellence. Now you have to have a functional centre of excellence
where you just focus on building the maturity in certain areas of your supply
chain.
You could also have a logistics centre of
excellence. You could have other centres of excellence, like a manufacturing
centre of excellence. The goal is to design your centre of excellence and be
aligned with the main activity across your whole value chain, which means if
you are a manufacturing organisation and a supply chain organisation or procurement,
you would organise your centre of excellence in a way that would incorporate
the strategy element into that. There are different ways of structuring a
supply chain centre of excellence.
My recommendation, if a business can afford it,
would be to focus on end to end, rather than just functional, because if you
just focus on functional excellence, again, your integration and collaboration
across the different functions might be a bit of a challenge.
Is
excellence an ever-moving target?
You always have to work on that. You’re never
done. If you really think about your
plan of a transformation, does it stop after three years? No, it’s not going to
stop.
What you’re hoping for when you had enough momentum, excitement and generated the results, is the building of a culture and a DNA. That is probably the longest part of a transformation which is never-ending, because if you think about it from a leadership point of view, when you build it with your team and operating system, you want to build something which is sustainable and not dependent on you as a leader or your team. It should be there, even if you move on. It should be part of the culture so that people and generations after can still build from what was built, to make it better.
Our cover story this month, features David Medori, Chief Procurement Officer at William Hill who reveals how strategic procurement is aiding the global gaming giant…
During 2018, 600 million bets were placed with William Hill, further establishing its reputation as a world leader in gaming. Employing more than 15,500 people in 10 countries, the 85-year-old bookmaker and games provider is continually innovating new and engaging ways to bet and game, whether in shops, sports books, online or mobile devices.
Leading a procurement function in this world-renowned brand and
operating on varying platforms in differing geographies is no easy task,
whether your requirement is software, hardware or professional services.
William Hill’s Chief Procurement Officer, David Medori, is responsible for
procurement of all third-party goods and services, covering indirect and direct
procurement. We met up with David at William Hill’s brand-new headquarters in
Tottenham Court Rd, London, to see how the procurement function is transforming
under his leadership…
Elsewhere, we spoke to Edgar Lim, Vice President of Technology and
Procurement at EnterSolar to explore how a sound procurement philosophyachieves growth in a “solar-coaster” market. Jon
Hansen tells us the 3 Obstacles To Digitally Transforming Your Supply
Chain and we also catch up with Tradeshift co-founder
Gert Sylvest, and CPO Roy Anderson, who reveal how their global open business
platform is transforming the future for buyers and sellers.
We also list the top 5 key influencers in procurement and reveal the
biggest events and conferences from around the globe.
With direct access to audiences across a global stage, social media has redefined the idea of influencers. Looking to tap…
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With direct access to audiences across a global stage, social media has redefined the idea of influencers.
Looking to tap into and explore this ever-growing resource, industry giants have their very own influencers steering and engaging the conversation. CPOstrategy looks at 5 leading procurement influencers as ranked by ProcurementiQ
Kelly Barner, Owner and Managing Director – Buyers Meeting Point
As the owner and manager of Buyers
Meeting Point, Barner has spent the last decade providing the procurement
industry with an unmissable events calendar, a blog that captures the current
procurement discourse, a huge social media network, and a uniquely engaging
podcast. Barner is the voice and the influential figure behind one of the most
trusted sources of information for procurement practitioners and solution
providers alike.
Lora Cecere, Founder – Supply Chain Insights
Supply Chain Insights,
of which Lora Cecere is the founder, is one of the most trusted resources of
independent, actionable and objective advice for global supply chain leaders.
Since the foundation in 2012, Cecere has sought to pave a new direction in
building thought-leading supply chain research.
CEO of one of the largest
not-for-profit organisations in the supply chain world, the Institute for
Supply Management (ISM), Tom Derry oversees the provision of market
intelligence, certification, training and professional development to
procurement and supply chain practitioners from all over the world. Derry also
sits on the board of the Society for Human Resource Management (SHRM), a
leading voice in addressing the evolving challenges in today’s workplaces.
Omid Ghamami, CEO and Chairman of the Board – Center for Purchasing and Supply Chain Management Excellence As CEO of the Center for Purchasing and Supply Chain Management Excellence, Omid Ghamami is the spearhead of the world’s most advanced, interactive and prestigious purchasing & supply chain management certification system. Calling on his extensive experience in managing purchasing and spend for global tech giants Intel, Ghamami works with some of the biggest companies in the world to foster a new order of supply chain management, one that sees organisations recognise the true value-added centre of profit that it can be for their business.
Dawn Tiura, CEO & President of Sourcing Industry Group
(SIG)
The CEO of Sourcing Industry Group
(SIG), Dawn Tiura drives the vision of creating a premier global sourcing
association that provides thought leadership and networking opportunities to
executives in sourcing and procurement from Fortune 500 and Global 1000
companies. Tiura describes herself as a passionate leader of SIG, going above
and beyond to raise the executive presence of sourcing, procurement and
outsourcing professionals. Since joining SIG in 2007, Tiura has truly
“revolutionised” the group in order to establish itself as the premier global
sourcing association.
The latest issue of CPOstrategy is live and this month’s cover story features Natalia Graves, VP Head of Procurement at cloud management giant Veeam Software who discusses its recent procurement transformation. “We looked at simplifying our processes and putting systems into place that allow Veeam teams across the globe to move even faster,” she explains.
Elsewhere, we speak to Dr. Preston Butler JR, on achieving
procurement excellence at Vinnell Arabia, which provides logistics and training
to the National Guard of Saudi Arabia. We also spend time with Mahmoud Al
Alawi, Director of Procurement and Contracts at Higher Colleges Technology
(HCT), who discusses the organisation’s digital journey in procurement. While Frank
Vorrath, Executive Partner Supply Chain at Gartner
details the hidden potential of a strategy-driven supply chain. We also
provide five big takeaways from World Procurement Week and list the best
procurement events and conferences from around the globe.
A global leader in procurement and supply chain, Sam Achampong is Head of CIPS MENA, and responsible for influencing supply…
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A global leader in procurement and supply chain, Sam Achampong is Head of CIPS MENA, and responsible for influencing supply chain and procurement transformation across the region.
So,
could you give us a brief outline of your role at CIPS MENA?
CIPS works in a number of ways. I
guess if you look at a triangle, there’s three main areas we work in. One is
education, and that’s around our qualifications. Another is around thought
leadership in terms of the events and social networks we create. The other is
around our B2B operations where we work directly with organisations to work on
the capability development of their own procurement teams, and their
procurement organisation.
The operation in the Middle East
has been around for about 10 years now. In terms of the region, I think we
acknowledge that the level of maturity in procurement is in many ways a little
bit behind more established areas of the world. But over the past 10 years that
gap has been closing. So, we’ve seen some significant strides in terms of how
people view procurement, and how strategic people see procurement. However, there
remains a lag in recognising it as a strategic function. We continue to work
with organisations and individuals in this region to improve that.
What are the challenges procurement is facing in MENA at the moment? Skill shortages or technology uptake?
So, it’s a bit of both. There are
skills shortages, because there is a lack of people who have those commensurate
professional and strategic skills in procurement in the region. So, let’s call
them licensed procurement professionals; people who are actually qualified in
procurement practice, and who have the skills in that function. So, that’s a
skills gap that only CPOs in the region will acknowledge.
The other thing is the recognition
of the profession itself. So, when you go above the actual stakeholders around
procurement, your CFO, CEOs, the C-suite and others, the recognition of
procurement as a strategic function is lacking in many ways here. So, what that
means is, you find that a lot of procurement departments are being used as
transactional departments, who are either performing a compliance role, or a
simple transactional role. So, that obviously diminishes the role of
procurement and diminishes the effectiveness of what procurement can deliver in
this region. really is a lack of depth in the market of people who have those
skills when they are called upon. So as a result, you cannot look to a major
organisation or a particular job description, procurement category manager, for
example, in a major bank and assume that they have the necessary skills that
you would expect a procurement IT category manager to have. Because there just
isn’t that depth of skills in many areas.
However, as I’ve said, there have
been big strides over the past five to eight years to improve that. So, there
are real centres of excellence around the region who have been working for a
long time to overhaul their entire departments. You’re talking about some of
the major organisations like ADNOC, the major oil company, or SABIC in Saudi
Arabia, around to Etihad Airways in Abu Dhabi, who’ve been working very hard
for a few years to ensure that procurement becomes a strategic function, and that
the people who work in it are professionals.
Would
you recommend more professional qualifications being introduced in the region?
Yeah, that’s the other side of it.
So, there is looking for people in the market who already have those skills,
that’s one side of it. The other side is putting together the infrastructure,
whereby people are able to get hold of those skills. So, that’s the backbone of
what we’re trying to do. We set up several study centres across the region
where people can go and study CIPS qualifications anywhere around the region
from Lebanon, to Bahrain, to Saudi Arabia, to the United Arab Emirates, to
Egypt. In addition to that, we’ve worked very closely with a lot of organisations
to set up in-house procurement academies, whereby we work directly with them to
upscale their teams to the highest level over a period of time. There are two
areas in which we work. One is the B2B, and the other is just for the B2C where
you have the student network and the individuals who want to attain those
skills.
We’re working with a lot of the
educational establishments to work with them to ensure that procurement
qualifications, skills and standards are available in the local university
network. So, we’ve done that across the region, where we work with centres of
education, to help them put in place skills and qualifications that are
commensurate with leading procurement practice.
I guess, the other side is away
from the people. It’s a case of how people actually do procurement. So, what are the strategic games, what are the
processes, practices? We’ve also worked with several organisations to provide
advisory services to look at how they actually do procurement and guide them
into putting into place procurement practices that are leading practices to
help achieve value. You’ll see organisations like the Dubai Expo 2020 project,
who have recently gone through what we call the CIPS Procurement Excellence
Program, where we review how they do procurement and guide them towards best
practice.
Have
you encountered a stark contrast between, broadly speaking, the Middle East and
the North Africa region?
In the Gulf, you will find real
centres of excellence and some real heavyweights in the public and private
sectors, who have invested in putting together skilled procurement
professionals, and invested in how their departments manage procurement
strategically. So, you will find some very educated and strategic people.
When you look more to North
Africa, Egypt is a very populous and academic country. So, you do find a lot of
people from the academic perspective, who have come through a level of education
to attain procurement skills; maybe not to the highest level, in terms of
strength and depth, but that’s the angle that happens in North Africa rather
than companies sponsoring people to go through qualifications.
West Africa, again, is slightly different.
You have countries in West Africa, like Ghana, who are working very hard now to
establish procurement centres of excellence among the public sector. So again,
we’re working very hard with them to put in place structures that defend how
they build up the reputation of good public procurement within those areas.
So, there are differences between
the Gulf, North Africa and West Africa and several subtleties between the
public and the private sector. But interestingly, I think what’s happened over
the years is that there’s always been a gulf in the maturity levels of the
practice of procurement and many other professions. What’s happened over the
last two or three, or three or four years is the advent of technology. So,
there’s an element now where people are looking to leap frog the long route of
getting people highly qualified and educated in procurement and are instead
trying to invest in technology to do that procurement for them, which makes
sense to a certain perspective. But obviously, the caution has always been to
make sure that whoever is working on procurement for you, in terms of people,
are highly skilled commercial managers, because it’s clear that you cannot rely
fully on technology.
I can recall one particular
instance where the prerogative was to try and eradicate as much as possible,
the ethics and procurement fraud from the procurement life cycle. So, the
solution that was being implemented was a whole-scale eSourcing suite, which is
a good idea in terms of transparency. But of course, the fact is that probably
80% of procurement fraud is carried out at the specification stage. So, you
still do need to work on the people, otherwise, you’re not really eradicating
the problem.
You
touched upon ethics, and obviously transparency within the supply chain is a
hot topic globally, so I guess within MENA, building trust is a very important
part attracting foreign investment, for example…
I think you’re right, and for any
country or region that’s looking to attract foreign investment, it’s incumbent
on them to create an environment conducive to that investment coming in. And
key to that is procurement, the reputation of how business is done, and how
supplies interact, and how organisations are gained through those transactions
across the supply chain to obtain value is absolutely crucial to attracting
investment.
So, ethics is key. We work with a
number of organisations across the region, specifically on that subject. In
fact, there are several organisations who now have the CIPS Ethics Kite Mark
where all of their team have, specifically on that subject, been trained in
ethics. The organisation can demonstrate that people within their team, as long
as they procure anything, they have a full knowledge of what the subject is.
Now, if you look at some statistics, and in terms of the effect on procurement,
I think procurement fraud is like taking up 20% of the cost of doing business
in developing countries, and 10% of the cost of doing procurement anywhere
else. So, I guess for those areas of those countries who can ill afford it,
that becomes a really, really important topic to address because it directly
affects their affordability to invest in infrastructure and other areas, as
it’s adding to the cost of doing business.
Technology is driving a lot of the procurement transformation stories at the moment and obviously MENA has had sort of issues such as the uptake of technology in the past and concepts such as cashless banking, plus they’ve had cyber security weaknesses. What kind of challenges have you seen there with regards to the technological side of it?
People have access to the latest
technology, and people do have access to, and are able to purchase, the best
solution they can afford. So, if there is an issue that it’s sometimes a case
of people over specifying what they want. So, an organisation may have acquired
the latest ERP or eSourcing suite, or solution, that is applicable to their
operations, and to a certain extent, other organisations have seen that and
said, “Okay, well, we’ll have that as well,” without aligning it
directly to what they need.
So, there has been, to a certain
extent, some over specification, which procurement transformations are now addressing.
There are an awful lot of procurement transformation going on, where organisations
are actually really looking at what they’ve done over the last 18 months and
sizing or repointing how technology is adding value.
So, you have people looking at
developing marketplaces, where they haven’t thought about it before. A lot of
organisations are creating their own marketplaces where everyone could be a
buyer, rather than continue to centralise procurement across the procurement
team. So, they are making use of those cloud-based systems and those
marketplaces enabled by some of the technological solutions out there.
Do
you see blockchain playing a bigger part in procurement transformation?
There’s a lot going on around blockchain
at the moment. We have the UAE government, for example, who have said that they
will become the first blockchain government by 2020. And there are several
practical examples of how blockchain is used around scanning trans-shipments
etc. There are many other examples from around the world and the region. I
think the reality is that blockchain is not yet an end-to-end solution. I think
when it is, then you’ll see the benefits of the really embedded end-to-end
blockchain solutions where people either have an in-house blockchain or a
localised blockchain across groups of businesses; a corporate blockchain.
I think that’s where regions like
the Middle East will come to the fore, because they are perfectly positioned to
be leaders in the adoption of this technology. Because they don’t have a lot of
legacy systems and practices to hinder their adoption of new technologies. They
also have very strong advocacy at government level. If the UAE government, for
example, says that they will become the first blockchain government by 2020.
Well, that means that everyone’s going to have to participate in that
transformation. Because if the government will make that a priority, then
certainly everyone else does it. So, there’s a great opportunity for wide scale
adoption of blockchain technology, when end-to-end solutions are implemented.
Companies out here are very, very open to the technological changes.
More than three quarters (81%) of B2B organisations are witnessing a decrease in profits due to online order errors, causing…
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More
than three quarters (81%) of B2B organisations are witnessing a decrease in
profits due to online order errors, causing significant repercussions on wider
business growth, according to new
research out today. 84% of businesses have witnessed a decrease in
efficiency due to order errors, while 81% saw a drop in productivity and a
further 81% saw a decrease in profitability. The survey of 560 global B2B
buying professionals found that 44% of organisations have witnessed a decrease
of more than 11% in sales, productivity, efficiency or profitability due to
errors during the purchasing process. Some are seeing a decrease in excess of
25%.
The
majority of B2B buyers place orders weekly, often daily, which means the
opportunity for errors to occur is high. 44% of individuals experience errors
with online orders at least once a fortnight, while a fifth encounter issues
weekly and 9% experience issues on a daily basis. With the majority of B2B
buyers preferring to buy online (75%) it’s critical that e-commerce platforms
can reflect current and accurate sales information, such as pricing, shipping
and stock as a way to help reduce errors.
The
research found that user entry was the top reason for problems occurring during
the online buying process. 28% however, felt that incorrect product information
is causing errors while 28% said it was incorrect purchase entry. Other reasons
for errors include incorrect inventory display (27%), incorrect shipping
information (25%) and incorrect pricing information (23%).
Online
order errors appear to be most frequent in Benelux with 55% of buyers
experiencing problems at least once a fortnight and 25% on a weekly basis. 48%
of businesses based in Germany, Austria and Switzerland also experience errors
once a fortnight and nearly half (46%) of British or Irish businesses face the
same problem. Yet order errors in the US and Canada appears to be less
frequent, with the majority (51%) witnessing order errors at least monthly.
B2B
buyers purchasing automotive parts appear to be the most susceptible to errors
when making purchases online, as 54% experience problems at least once a
fortnight. This is closely followed by those purchasing building materials
(53%) and food & beverage products (52%).
Michiel
Schipperus, CEO and Managing Partner at Sana Commerce comments: “B2B
organisations have embraced e-commerce as a route to market and as a way to
remain competitive and reach new markets. But our research highlights the need
for e-commerce platforms to deliver accuracy across all buying channels.
Ensuring that the e-commerce system is integrated into the organisation’s ERP
platform to provide a single source of truth at the point of purchase goes a long
way to ensuring that customers have the correct information needed to make an
informed purchase decision and reduce order errors.”
The
survey of B2B organisations in Europe and the US was undertaken by independent
market research company Sapio on behalf on Sana Commerce. The survey sample
covered food and beverage, electronics, building materials, medical supplies
and automotive parts. For more insights download the report here.
With procurement undergoing nothing short of a revolution right now, the brand-new CPOstrategy will keep you up to speed with…
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With procurement undergoing nothing short of a revolution right now, the brand-new CPOstrategy will keep you up to speed with all the latest insights and stories from the biggest names in this space. Each month, we will cover all aspects of procurement strategy and transformation as well as supply chain digitisation and management. CPOstrategy is from executive, for executive. Read the launch issue now!
Procurement is being
transformed by new technologies, but people are the secret to success according
to LEO Pharma’s Head of Operational
Procurement, Martin Starcke in our cover story this month. Drug developer LEO
Pharma is seeking to revolutionise its procurement right now through the
deployment of a decentralised system. However, Starcke, believes that the digital
transformation of procurement is about a lot more than software or computer
services. “It’s fundamentally about people. I think implementing software,
implementing the technology is around 10% of your effort,” he says.
We also have an
exclusive interview with Frank Vorrath,
Executive Partner for the Gartner CSCO and COO Service who talks about the
importance of delivering real value to its clients.
Elsewhere, we speak to
procurement consultancy Efficio who prompts
the question: “Are procurement leaders feeling let down by technology?” We also
detail the barriers to smart procurement
technology and list the five top
reasons why supply chain strategies fail and what to do about it. Plus,
lots, lots more.
Global procurement market intelligence firm SpendEdge has released its Global E-Commerce Logistics Category of its Procurement Market Intelligence Report. According…
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Global
procurement market intelligence firm SpendEdge has released its Global
E-Commerce Logistics Category of its Procurement Market Intelligence Report.
According to SpendEdge, “the growing popularity of the e-commerce industry has spurred the rise
in intra-regional and cross-border trade which is supported by the prevalence
of favourable e-commerce trade policies across the globe”.
The improving purchasing power is, according to the report,
giving freedom to the working-age population to exhibit a significant
incremental spend on e-commerce websites, which consequently, is accelerating
spend momentum of the e-commerce logistics market.
This e-commerce logistics market intelligence report offers
a comprehensive analysis of the primary cost drivers and its subsequent impact
on the overall pricing. Current supply market forecasts and the spend
opportunities for the suppliers are also outlined and the category spend is
analysed from the perspective of both buyers and the suppliers.
SpendEdge procurement expert Anil Seth said: “Buyer’s
service requirements vary based on their geographic location. This makes it
essential for them to select suppliers based on their capability to provide
customised services.”
Every business needs to remain on top of its supplier relationships but, of course, there is more to procurement than…
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Every business needs to remain on top of its
supplier relationships but, of course, there is more to procurement than making
a few back-of-the-envelope calculations about which materials and services are
needed. All manner of concerns can come into play: cost – but also regulator
compliance, forward planning and more.
Clearly this is an area where IT systems can
play a role, smoothing out what can be a notoriously laborious process. And yet
business-to-business purchasing as a whole lags well behind
business-to-consumer when it comes to volume. Only 13 percent of business-to-business sales are being
conducted online.
So, is procurement a cold house for IT? Or is
it that further investment is required? Or are some kinds of suppliers simply
easier to deal with face-to-face? After all, buying professional services is
quite different from buying a thousand ballpoint pens.
Being digital
Peter Wetherill, senior technology manager at procurement specialists Efficio Consulting, says that as companies go digital it is natural that processes such as procurement come under scrutiny.
“We published a study recently, looking at the
future of procurement; looking at whether or not digitalisation is the future.
Everyone is [being] pushed to have a digital strategy these days, so we try to
turn it into something actionable.”
The objective
should be to make things more efficient, he says.
“If you look at things like strategic sourcing,
spend analysis and running a sourcing event—those are very ‘processised’
things. We’ve run that as a structure thing for 18 years ourselves [and] we’re
building technology now that adds automation to it. It’s repeatable.”
Where the real value is added, though, is not merely in the technology, says Wetherill. Instead, it is in intelligence.
“There are a number of assets you create during the process that are useful the next time. Instead of reinventing the wheel, you use the same things, albeit modified. Technology really lends itself to the strategic part of procurement. Time and time again I’ve sat with clients who have brand new installations, but it has nothing in it and [so] they’re only using ten to fifteen percent of its capability. They’re not getting the business use case out of it.”
In effect, then the question becomes no longer
one of either procurement or IT per se, but about how to implement a process that
makes use of the intelligence in a business.
“Are various KPIs being hit? Am I paying the right price? It’s part people, part machine, but we’ve built something that rather than trying to map invoices to the project, has a workflow that does all these things properly; it has the rate card in it, it has all the data [and] you can run a large programme through this and show the [for example] five percent where there is non-compliance.
“The
technology is not there to remove the human element, it’s there to help make
more data-driven decisions,” he says.
Computer says no
Allyson Stewart-Allen, chief executive of
International Marketing Partners, says that she has doubts about deepening the
intrusion of IT into procurement—at least when it comes to some types of
purchasing.
“I think it’s affecting the bidders
significantly because they aren’t always clear what the criteria are. They may
be bidding for the provision of professional services and, traditionally, those
require a relationship of some kind: interaction with the client and the
buyers,” she says.
Stewart-Allen says that the challenge of e-bidding is that
you do not get to easily convey the values of your business.
“It’s even more difficult with professional
services, as you’re buying the people, buying their judgement, and not a
product.
“My frustration and challenge is that I don’t
get to readily communicate, other than in print, what my sources of
differentiation are. They can read my background on the website, but that’s not
the same as putting trust in the person’s judgement and the ability to
contextualise,” she says.
Nonetheless, IT systems are here to stay,
including machine learning (ML) and artificial intelligence (AI) that reduces
administration and opportunity for human error.
Procuring IT
One area where it is natural for IT systems to
take a lead in procurement is in the procurement of IT itself. This has changed
radically as the culture of IT departments has changed—not least as IT now
typically has increased board-level representation and it is expected to make a
strategic contribution to business objectives.
“It’s an interesting time,” says Charles Blair, a
senior management consultant for technology at Efficio.
CIO agendas have changed. They used to be about building IT; pulling all the widgets together and keeping the lights on. Nowadays, with the maturity and commodification of all of these services, you can buy then all in in the form of managed services. CIOs [now] have a much more greater focus on cost,” he says.
However, IT departments, historically, have not
has the skillsets needed for procurement, he says.
“IT teams don’t
typically have negotiation skills. Procurement as well, they’re not technology
guys.
“There was [previously] a bit of a ‘project
culture’, and procurement wasn’t involved until the end of the process.
Procurement ended up with a really bad name. Likewise, some people in
procurement don’t understand IT and challenged on the wrong things, [while], on
the other side, IT would be approaching suppliers in the wrong way and eroding
any levers procurement might have,” he says.
Nonetheless, despite the trend toward cloud
computing and external service provision, there is greater need for procurement
in IT rather than less. True, fewer servers and switches are being bought, but
those were always easier to buy than services.
“Cost in technology is on the increase as software is invested in instead of people, and also with the trend for using suppliers,” says Blair.
“There’s no reason for most companies to have
their own service desk. It’s much cheaper and more efficient to get a service
provider who does it all the time to run it. [But] Services like that need to
be obtained in accordance with service level agreements (SLAs) and (key
performance indicators (KPIs),” he says.
So, in fact, the
stakes are higher than ever—and they are also not on-off.
“Procurement is not only about sourcing the
solution, but also about managing it,” says Blair.
Whether for IT services or any other kind one
contractor relationship, procurement teams must, says Allyson Stewart-Allen,
make it clear to the business that any IT used should be there to support the decision-making process, not
replace it.
“The issue that the procurement folks have that
they don’t push back. There’s a difference between buying professional services
versus buying pens,” she says.
In the end, for Stewart-Allen, humans may
be aided by machines, but letting the machines replace them is a false economy.
“They’re seeking
efficiency, but end-up making bad decisions,” she says.
“Maybe they could make better decisions if they
applied different processes to services vs goods. I think that the challenge is
the one-size-fits-all mentality. There is often bind faith put in technology
and what it’s going to do for you, versus the reality. It’s not a great idea
when you’re buying people,” she says.
