CIPS Republic of Ireland Summer Event...Leading global excellence in procurement and supply CIPS...

Leading global excellence in procurement and supply

CIPS Republic of IrelandSummer Event

“Innovation in Procurement”Sponsored by Hays

Eoin Lonergan, FCIPS Branch Chair, Matt Lowe, MCIPS Vice Chair, Byron Smith, MCIPS Secretary, Barry Finn, CIPS Dip Events Officer

Dates for your diary: Autumn Event - Sept 18th

AGM and Xmas - Nov 27th

Leading global excellence in procurement and supply

2© 2016 CIPS Group CEO

Agenda18:00 Event registration and refreshments

18:45 Welcome by Branch Chair Eoin Lonergan FCIPS

19.00 Innovate or Evaporate ! Ross McCarthy – ISME & Keystone

19:20 Automate or be outsourced ! Alan Phelan - Sourcedogg

19:50Blockchain and procurement –friend or foe!

Alan Bermingham MCIPS- Exertis

20.10 Panel Q&A -Speakers joined by Eavan O’Halloran (Dunnes) and Josh Grant (Hays)

20:30 Drinks and networking

21:00 Event close - approx

Leading global excellence in procurement and supply

3

“The Voice, the Standard”

The largest global professional body in Procurement and Supply- Offices on 4 continents in 6 countries- Community of >120,000 in more than 100 countries with Branch Network- Monthly print and PDF magazine

The global standard for the profession- Mandated by sovereign countries, multi-lateral agencies and multi-national companies. Recepient of major grant from Bill Gates Foundation

The profession’s advocate for leading practice - Chartered Status - Highly Competitive Annual Awards Event

The only prof P&S body to degree level, independently regulated - Comprehensive Education Syllabus constantly updated (2019) with own Text Books

-Multiple entry levels including apprenticships

The leading voice of the profession - www.cips.org - c1.3 million annual users- Purchasing Managers Index ((PMI) is official economic indicator in UK

THE INNOVATION IMPERATIVE FOR BUYERS AND SUPPLIERS

Ross McCarthy

June 2019

CIPS Dublin

INNOVATE OR EVAPORATE

Complex organisations are locked into disruptive, market driven change

Interconnectedness, globalism and automation are the key drivers of this

New technologies are emerging and disappearing at breakneck speed

The labour force is changing as are its values and expectations

There is competition for resources in all directions

Ireland skipped the industrial revolution but this means it has a lop sided economy – we don’t make many things

Brexit is exposing the dependence on the UK manufacturing base to plug gaps in our economic model

The domestic supply base is weak on a relative and comparative basis to peer states

Huge challenges are here now (climate change, aging society, automation etc.)

CREATIVITY VS INNOVATION

Creativity is the process of creating something new that has value.

Innovation is the process of creating something new that has value to an individual, group or organisation.

Without a focus on creating and innovation, organisations cannot adapt and get left behind – overwhelmed by the kinds of challenges outlined on the last slide.

The 4 P’s Approach

CreativityProcesses (techniques) along with personal and group creativity1Organisational CultureSystematic emphasis on identifying possibilities2Innovation4 tyoes of innovation: product, process, marketing and management3

MINING FOR INNOVATION

Product

Innovation

Marketing /

Comms

Innovation

Process

Innovation

Management

Innovation

Idea is to generate new

products & services or

improvements to existing ones.

Idea is to improve the efficiency

and effectiveness of existing

processes in an organisation.

While this focuses on

marketing mix in business, it’s

really about communications.

Emphasis is on improved

management systems to

improve overall outcomes /

results.

REALITY CHECK 1: ARE WE THE PROBLEM?

Buyers

• You cannot expect anything other than modest, low impact improvement if your organisation is dysfunctional

• Organisations like Musgraves, Glanbia and Diageo to name three work with suppliers to develop them over years

• This attitude develops aptitude and increases the knowledge and synergy necessary for high impact, value adding, adaptive change

Suppliers

• Would they recognise innovation if they were bludgeoned into a stupor with it?

• Don’t go fishing in a dry ditch – focus on suppliers that are committed to progressive practices.

• It’s a combination of push and pull techniques – you may need both.

• If risk appetite is very low, you will only achieve what you can get from contract negotiations.

BIG CHANGE VS EVOLUTIONARY CHANGE

• It is exciting to talk about major change but that is not where the focus will typically be for buyers.

• Big Change is typically rare. The much bigger opportunity lies in every day contract management and supplier relationship management.

• This said, some techniques from Big Change work regardless of the size of the actual proposed change so we will briefly look at two models.

A METHOD FOR ELICITING INNOVATION1.$Cura3ng$innova3on$(2/2)$

• This$is$a$model$for$innova3on$development$–$there$are$innumerable$models.$This$is$one$that$is$fit$for$purpose$for$this$conversa3on.$$

Idea$Genera3on$ Solu3on$development$ Idea$Advancement$

Exis3ng$Business$Model$

New$Business$Models$

Open$Innova3on$

Op3on$value$

Strategic$Value$

Exit$value$

End$solu3on$meets$

requirements$

Sustainable$solu3on$

Technically$

Feasible$

Ideas$ Ac3ons$

Form$Hypothesis$ Experiment$ Implementa3on$

A TECHNIQUE FOR DELIVERING INNOVATION

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• This technique is called Design for Six Sigma – there are many, many techniques.

THE ROLE OF PROCUREMENT IN THIS CYCLE

• Procurement practitioners must act as internal providers of value added services capable of delivering change through structured purchasing processes and through strategic contract management techniques.

• In compliance/commissioner models, you may have to accept your impact is dependent on the cultural mindset.

• In buyer led models, it is down to the procurement function to lead this with the internal customers.

WHEN AND HOW

• It should be specified in the tender documentation

• You can be specific about the need for a process

• Typical approaches tend to focus on the “lucky bag” approach

• You could be more prescriptive and seek (for instance) Kaizen workshops as part of the contract price

• It may mean that some extra expenditure creeps in but you’ll have a better chance of explicitly generating practical value add changes

• Ensure the contract management process matters

• Price only contracts can limit the opportunity for added value as margins are often very tight

• For contracts with a higher quality rating, it can often be the case that the actual contract management element gets insufficient attention and weighting

• Frequent supplier reviews with issue management and continuous improvement as standing items generate potential opportunities for improvement / enhancements to current requirements

During the Tender Process During the Contract Management Process

UNLOCKING VALUE IN

CONTRACT MANAGEMENT

(1/2)

• Use supplier review meetings well

• Use the procurement rules to your advantage (e.g. around R&D)

• Don’t be afraid to crack out the wallet if it is worth it

• Use the salami technique, repeatedly, until you get push back

UNLOCKING VALUE IN CONTRACT MANAGEMENT (2/2)

• Prioritise options generated for implementation

• Use evidence and where required formal business cases to generate a case for change and internal support

• Be open with the supplier(s) and give them a chance to show what they can do

• Collaboration is key – you will need to input into the process, if you want to get outputs from it

REALITY CHECK 1: DO YOU WANT THIS?

Buyers

• Many organisations simply want to squeeze until the budgie croaks it

• If there isn’t engagement, fairness and commitment to a process of generating improvement / change, it is pointless

• Humans instinctively lie through their teeth – most people dislike change

Suppliers

• Most suppliers will do what suits them, if anything, left to their own devices

• If challenged, you may need to give the suppliers suggestions and/or work with them to identify how changes can be delivered

SOME EXAMPLES OF BUYER-LED INNOVATION

Phased approach to ERP Replacement Project

We are working with an Irish manufacturing client who need to replace their ERP system. We were engaged for a private sector technology tendering project by them.

They weren’t ready and our estimates showed we could save them up to €400,000 by doing the process mapping and wireframes before commissioning the ERP (whichever platform). We have undertaken all this work for them as part of the procurement prep and spec process.

An implementer will be hired for programming and rollout only – saving significant resources for the client.

SOME EXAMPLES OF BUYER-LED INNOVATION

Inventing a Quality Management System

This is an active scenario in the public sector for specialised transport services. The Contracting Authority is unhappy with the supply options they have at present.

We are planning a supplier development programme where a process is designed and certified to Q-Mark or ISO9001 standards for a transport process. It will be bespoke.

New supply options will then be encouraged. This will provide existing suppliers a chance to improve and give new supply options a benchmark to align upon. It will be third party certified.

SOME EXAMPLES OF BUYER-LED INNOVATION

Hybrid model for value creation

The lucky bag approach is dependent on suppliers. CA’s are often ill equipped to prioritise the most beneficial change.

Consider deploying a specialist internal or external resource to deliver high impact value creation on prioritised identified opportunities.

Their role is to act as a mentor / advisor / coach to the Buyer and the supplier. Sometimes, you’ve to spend money to make money / savings.

Leading global excellence in procurement and supply

20© 2016 CIPS Group CEO

Agenda18:00 Event registration and refreshments

18:45 Welcome by Branch Chair Eoin Lonergan FCIPS

19.00 Innovate or Evaporate ! Ross McCarthy – ISME & Keystone

19:20 Automate or be outsourced ! Alan Phelan - Sourcedogg

19:50Blockchain and procurement –friend or foe!

Alan Bermingham MCIPS- Exertis

20.10 Panel Q&A -Speakers joined by Eavan O’Halloran (Dunnes) and Josh Grant (Hays)

20:30 Drinks and networking

21:00 Event close - approx

INNOVATION IN PROCUREMENT

CIPS ROI Branch, Summer Event

26th June 2019

Alan Phelan, CEO

Co

ntract

Register &

Alerts

Supplier Master

Data

Knowledge Base

Contract Management

Supplier Relationship Managemen

t

Guided Buying

Strategic Sourcing

OUR FUNCTIONALITY

WILL YOUR DEPARTMENT BE OUTSOURCED?

ARE YOU AUTOMATED?

CLOUD COMPUTING GROWTH

E A S Y TO A U TO M AT E

• P ro c e d u r a l

• Tr a n s a c t i o n a l

• Re p e a t a b l e

• D a t a A n a l y s i s

D I F F I C U LT TO A U TO M AT E

• St r a t e g y

• P ro c e s s I m p ro v e m e n t

• I n t e r p re t a t i o n

• Re l a t i o n s h i p s

www.sourcedogg.com

alan.phelan@sourcedogg.com

https://www.linkedin.com/in/phelanalan/

THANK YOU

Leading global excellence in procurement and supply

28© 2016 CIPS Group CEO

Agenda18:00 Event registration and refreshments

18:45 Welcome by Branch Chair Eoin Lonergan FCIPS

19.00 Innovate or Evaporate ! Ross McCarthy – ISME & Keystone

19:20 Automate or be outsourced ! Alan Phelan - Sourcedogg

19:50Blockchain and procurement –friend or foe!

Alan Bermingham MCIPS- Exertis

20.10 Panel Q&A -Speakers joined by Eavan O’Halloran (Dunnes) and Josh Grant (Hays)

20:30 Drinks and networking

21:00 Event close - approx

Blockchain: Application to Procurement Functions

Alan Bermingham – Blockchain Lead

Exertis

www.exertis.ie

www.linkedin.com/in/berminghamalan

A member of one of the largest and fastest growing technology

distribution & supply chain management businesses in Europe

In business for over 30 years

$3 billion turnover per annum

Access to 21,000 resellers across Europe

Who We Are

Part of DCC plc,

a FTSE 100 company

with combined

annual sales of

over $16 billion

Exertis SCS is a leader in materials supply chain design &

operation. Delivering cost, capital & complexity optimisation

for our global clients

six continents

Where We Are

global operationsWe have and spanningpartnerships

Blockchain Project Overview- Disruptive Technology Innovation Fund

• A consortium led by Exertis has secured

Irish Government funding to support its

'Blockchain in The Technology Product

Supply Chain' Project with 1.65 mil euro

budget.

• Partners: University College Dublin and

Sonalake

• Exertis will build a platform for

technology product distribution using a

permissioned (B2B) Blockchain.

https://youtu.be/hB8Csv6thf4

DTIF Overview

Blockchain v Traditional

Traditional Commerce

• Each party in a trading relationship has a set of books,

or ‘ledger’ (An ERP system e.g. SAP)

• Parties exchange information (e.g. PO’s) via email,

portals, EDI & web-services. The individual ledger’s

remain separate.

Blockchain Concept

• One ledger: shared/ replicated

• Distributed and immutable manner.

• Transactions are recorded on the ledger and cannot be

altered.

• Rules of what transactions are allowed. Consensus

mechanism.

• Automated Transactions: ‘smart contract’.

Blockchain – Features and Benefits

FEATURES

• Transparency

• Connectivity

• Automation

• Traceability

• Security

• Tokenisation

BUSINESS BENEFITS

• COLLABORATION (INTERNAL &

INTER-COMPANY)

• PROCESS / OPERATIONAL

EFFICIENCY

• SHORTER LEAD TIMES

• REDUCE FRAUD & COUNTERFEIT

• NEW COMMERCIAL MODELS

Current Integration

Model

Blockchain

Model

3PL

Component

Manufacturers

4PLs

Finished Good

Manufacturer

DistributorsSub-Component

Manufacturers

Resellers

Customer

3PL’s

Customer

Reseller

Distributor

Finished Good

Manufacturer4PL

Component

Manufacturer

Sub-Component

Manufacturer

What will the transformation look like..?

What does blockchain potentially offer..

ManufacturesOEM

Distributor

Reselle

r

Warranty & Repair

Service

Order

Order

Consumer Order

Ships

Ships

Ships

Receives Registers Serial

Registers Serial

Registers Serial

Registers Serial

Receives Checks Serial Repairs/ Refurbs

Supply Traceability Ensure Authenticity Product Lifecycle Analytics Shared Visibility

Platform will provide…

• Orders & Shipments

data

• Product Serial

Numbers Tracking

• Usage (IoT Data)

• Rich Analytics

The Complexity of

Procurement and the

Blockchain Use Case

Due Diligence

Smart Contracts

Visibility in the Supply

Chain

Automation – Ordering /

Payments

Application to Procurement Activities

So what is next…?