Navigating the complexity of the global supply chain as a procurement professional can sometimes feel like taking a walk through the Amazon without a compass, or entering into outer space without an oxygen tank.
It’s important that procurement teams take into account the new risk reality and challenges that face them, their organizations and their value chains. As the world around us continues to put the pedal to the metal within the digitalization of business solutions, procurement can’t decide to slow down for every speed bump. At the same time, it’s never smart to punch the gas if you haven’t packed a spare tire. You never know when you might run into something sharp along the way.
Finding the perfect balance between preparation and action can be tricky.
To help those survivalists out there who might feel a bit lost at the moment, Kodiak Rating has prepared a list of a few things you can’t leave the house without, or without knowing, before braving the journey into the galaxy of digital transformation.
While it may seem simple, or mundane, benchmarking the digital solutions on the market should be the first step to any kind of digitalization.
‘Before building a digital roadmap? That doesn’t make any sense! How can I know what to look for if I don’t know when, or where, I want it!’
Fact: A digital procurement roadmap is a cornerstone of any procurement organization’s digitalization journey.
But, it doesn’t have to be the deciding factor, the end all to be all or the absolute first step in an evaluation of digital procurement solutions. Sometimes getting out there, requesting demos, and seeing what the market has to offer is the clearest way to understand what kind of requirements you should be putting on prospective suppliers in an RFx or a deepened solution evaluation process.
Digitalization doesn’t always result in direct digital conversion of existing analog processes and manual operations. Sometimes, digitalization requires change management, process shifts, and organizational restructuring. Simply, the way you’re working today isn’t necessarily the right way to work tomorrow.
This is why benchmarking is a crucial part of going digital.
Following a digital roadmap, and building requirements based upon existing processes and strategies doesn’t always reflect what the market has to offer. Without benchmarking one can very easily shoot way too high, or aim far too low. Even worse, you may create gaps that will prove difficult to fill later.
As consumers, we make a shopping list before going to get groceries. I don’t know about you, but I typically frequent the same store; the ICA in Täby, Sweden, and I’m there once every other week to buy groceries for the coming two weeks. I first build my list based around desired meals. Next, items are ordered on the list with how the store is arranged. Produce comes first, then fruit, then bread, so forth and so on. But, what if I didn’t know what the store looked like? Would I be able to create such an organized and ordered list? What if I didn’t know what was at the store at all? Could I just write things down, and hope for the best? What if I see something at the store that I want, and even need, but it’s not on my list? Would I say, ‘Oh shoot, I forgot I needed toothpaste? Oh well, maybe next month’…?
While planning is your best friend for ensuring digital strategies are properly executed, in the same way, a shopping list makes a trip to the supermarket easy, rigidity around that plan can prove to be your greatest enemy.
Trust the Startups
When most people hear the word ‘startup’ their minds instantly wander to a mental image of a business started by young adults, sitting around on beanbag chairs, wearing branded t-shirts and hooded sweatshirts, down to their last cent of funding and underdeveloped as an organization.
Do your thoughts align with that mental picture described above?
When I hear the word startup I think instantly of tech, innovation, market expansion, disruption, new products, and exciting opportunity.
I, as an employee of a growth venture ProcureTech company, am (of course) a bit biased within my opinions surrounding the stereotyped image of a startup, but I view startups as ‘market gap-fillers’. They see problems, develop solutions to the problem, package that solution, refine that solution, and often repackage that solution.
What I’m getting at is… don’t be afraid to be an early adopter or co-innovator.
Be transparent and put your challenges in front of innovative solution providers after you’ve qualified their ability to deliver value. There’s a good chance solution providers will have some answers to the headaches your excel sheets & homegrown solutions are causing, and/or they’ll be willing to work with you in an agile framework, sharing innovation investment, to create a modern solution tailored to your particular needs. Take a chance (not a risk) on startups and growth ventures in the space of procurement tech to run POCs and see what kind of value they can deliver.
What do you have to lose?
Recent reports pictured about from Deloitte’s CPO Survey in 2019 found that 81% of Procurement Leaders aren’t satisfied with their solutions for Supply Chain Risk & Compliance, 71% aren’t satisfied with existing solutions for SIM, SRM & SPM, 64% aren’t satisfied with their solutions for Contract Management. So, with these statistics in mind, would you say that working w/ a startup is too big of a risk…?
Join the Community & Conversation
“Education is the most powerful weapon which you can use to change the world”. — Nelson Mandela
Education and development of one’s thoughts & knowledge is a process that should never cease to exist.
In order to ensure that you’re keeping up to date w/ the latest trends and knowledge surrounding digital procurement solutions and technology, you’ll want to actively join the conversation. This may seem pretty straightforward, but in a world of more crap than fact, it’s not always easy to find communities that contain qualified professionals and content.
Below are some outlets that are trustworthy sources of news, content, reports, and conversations:
LinkedIn Groups can be an awesome place to find interesting articles, news, webinars, eBooks, conversational threads, new technology vendors and inspiration.
Above all, LinkedIn Groups focused around procurement & sourcing keep you in large networks, amongst your peers. Looking to be a part of the conversation on LinkedIn? Check out some of Kodiak Rating’s favorite groups below where you can ask to join, and get involved in the conversation:
- Buyers Meeting Point — Procurement Networking and Knowledge
- Strategic Sourcing & Procurement
- Global Procurement & Supply Chain Management Professionals
- Digital Procurement World
- Sourcing and Procurement Group
- Purchasing & Global Supply Chain Professionals
There are plenty of great blogs and news outlets on the web where one can find interesting articles surrounding procurement & sourcing, but below are some of our favorite go-to outlets!
Communities and Educational Organizations
Widen your Focus, Narrow your Initiative
When racehorses race competitively, they wear a mask.
I have a vivid memory, as a child, of asking my grandfather about this right before the running of the Kentucky Derby.
He answered, “It’s not a mask. It’s blinders. They put that on the horse’s head so they’re not able to see the horse next to them. That way, they won’t be distracted when they run, so they can focus on their own sprint.”
Whilst horseracing & procurement are two entirely different disciplines, I think that the concept of ‘putting up the blinders’ is a relevant point when navigating your way through the digital procurement galaxy.
Check out this graphic below.
Source: Paua Ventures
This was put together by Paua Ventures after DPW 2019. There are a lot of solution providers on the market, as you can see. And, whilst this graphic is a great representation, and visual aid for positioning solution providers within ProcureTech, it also displays that there are a ton of actors out there and a lot of disciplines to focus on when going digital.
Make sure you know when it’s time to narrow your focus, and put on the blinders.
If you’re looking to implement a spend solution, then do so. Need to strengthen supplier compliance? Find a solution and check that off your list. Operational procurement? Find a P2P that works for you then move on to the next project. It’s important to have a holistic approach and strategy, but if you don’t know when to narrow your focus, you may get caught up in the magnitude of a digital shift.
What you can’t leave the house without
Check out this graphic below.
The complexity of this procurement lifecycle graphic indicates the complexity that comes with the role and digitalization of the procurement function.
Each discipline has its place in the procurement cycle, and likely requires the application of procurement technology. But put that thought on ice for a moment. Because it’s not realistic. Not in one solution. Even large S2P vendors, such as Ariba, Coupa, and Ivalua will never cover the scope of a full procurement lifecycle. Not to 100%.
What I find most useful about this particular graphic is the differentiation between the inner & outer ring of the procurement lifecycle.
The inner ring & central focus areas being:
- Strategic Sourcing
- Contract Management
- Purchasing/Spot Buys
- Spend Analysis
Some of these areas are easier to automate than others, and you likely have something in place to handle. For example, there are a plethora of tools that offer a rather high-level of automation within payment (Tradeshift, Basware, etc.) & spend analysis (Sievo, Spendency, Ignite Procurement, and more).
These are definitely some tools that you should have in place to keep the backbone of your purchasing data-driven & keep your suppliers’ invoices paid in full.
But, what are some of the solutions you can’t leave the house without? The solutions that are often forgotten?
Megatrends show us that consumers are more awake now than ever before. They’re climate-conscious, informed & hungry for transparency. People don’t want to buy something because it’s cheap anymore, they want to buy something because it’s from a brand they trust. 56% of consumers surveyed they’d be loyal for life to a transparent brand (Label Insight 2019).
It’s no fluke that 2 of the top 3 prioritized strategies by Procurement Leaders over the next 12 months are focused on risk & CSR (Deloitte 2019). Sustainability is hot. And, you can’t leave the house without giving it to your customers & consumers at large!
Adopting solutions that enhance risk management, transparency, visibility & compliance is more important now than ever before. Brand value, in a world of accessibility to information, is in a very delicate position. One of the best ways to support supply chain resilience is to ensure that you’re preemptive. That means you need to know your supplier. And you can’t brave this new world without solutions to manage your suppliers.