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Procurement Excellence
Influence & Impact
Paul Vincent
15th September 2016
QUICK UPDATE
Buying Consultancy Services
www.kellyocg.com/Blogs/
Melbourne: 13th and 14th October
Sydney: 18th, 19th and 20th October
Insightful content, practical exercises and
group discussion, covering:
• How to effectively define consulting needs
• How to select the right supplier and contract appropriately
• How to ensure the required outcomes are delivered
• How to effectively evaluate performance
• How to navigate internal roles and responsibilities
To find out more about the session
and reserve your place contact
ONE DAY WORKSHOPS
Buying Consultancy Services
AGENDA Why commercial and technical skills are no longer enough
What a change-management mindset means for procurement professionals
How to identify and focus on what matters most to your internal stakeholders
5th annual survey of senior procurement leaders
324 responses from 33 countries
Annual turnover of surveyed organisations = US$4.4 trillion
Key Findings
• Cost reduction is the top priority for CPOs as they look to sustain business growth in a slowing market
• Stronger relationships and understanding between procurement and the CEO and CFO
• Increased levels of supplier collaboration while continuing to focus on consolidation and relationship restructuring
• Increasing levels of core and transactional outsourcing with strategies shaped in some way by each organisations approach to global business services.
• A continued issue on securing, retaining and training the right talent pool
2016 Deloitte CPO Survey
5th annual survey of senior procurement leaders
324 responses from 33 countries
Annual turnover of surveyed organisations = US$4.4 trillion
Key Findings
• Cost reduction is the top priority for CPOs as they look to sustain business growth in a slowing market
• Stronger relationships and understanding between procurement and the CEO and CFO
• Increased levels of supplier collaboration while continuing to focus on consolidation and relationship restructuring
• Increasing levels of core and transactional outsourcing with strategies shaped in some way by each organisations approach to global business services.
• A continued issue on securing, retaining and training the right talent pool
2016 Deloitte CPO Survey
62% of CPOs don't believe their teams have the skills to deliver the functions strategy
Source: Deloitte Annual CPO Survey 2016
The perceived talent gap in
procurement is widening
Source: Deloitte Annual CPO Survey 2016
52% 20
13
2
01
4
20
15
62%
Investment in talent
development is declining
Source: Deloitte Annual CPO Survey 2016
2012
3% spent less than 1%
on training budgets
2015
29% spent less than 1%
on training budgets
The enabling skills are
just not being taught
Understanding the buying landscape is critical
INTERNAL STAKEHOLDER
SUPPLIER
Business
Context
Stakeholder
Hierarchy
Market
Forces
Financial
Approver
Related
Activity
Procurement
VALUE
Understanding the buying landscape is critical
INTERNAL STAKEHOLDER
SUPPLIER
WHY
WHAT
WHO
HOW
WHERE
WHEN
Internal Stakeholder
Business Context
Market Forces
Stakeholder Hierarchy
Financial Approver
Procurement
Related Activity
Supplier
Organisational
Culture & Politics
Challenges
Opportunities
Individual
Knowledge
Experience
Credibility
Understanding the buying landscape is critical
The 3 types of procurement professional
TYPE 1
The Career Buyer
Procurement-only roles
Operates “by the book”
Generalist with varied category experience
Focused on the demands of line management
& internal stakeholders
Not receptive to unsolicited supplier ideas
Controlled, a little aloof, unemotional
Tends to see price first and value second
TYPE 2
The Butterfly Regarded as a Procurement specialist,
typically in specific categories
Gravitates towards ‘headline-grabbing’ deals
Often views negotiation as a sport
Choreographs situations to maximise pricing
leverage
Claims to have good internal relationships,
but in reality they can be quite surface
Regularly moves roles/organizations and
rarely gets involved in contract
management matters
Not particularly focused on business
outcomes
Well networked
TYPE 3
The Change Agent Broader business mind-set
Experienced in other functional areas
Strong internal network
‘Internal consumer’ approach
Interested in innovation, new ideas,
good practices
Focused on business outcomes, and
genuine, sustainable value
Challenges processes that do not add value
Receptive to unsolicited supplier ideas
Today’s challenges require change management thinking most of all
Change Management Thinking
has two key strands
Constantly Eliminating Non Value Add Activities
Continually Looking for Further Improvements
UP
STR
EA
M
DO
WN
STR
EA
M
Eliminating non value add activities THE 8 DEADLY SINS OF ‘WASTE’
5 Transportation
6 Wasted Motion
7 Waiting Time
8 Unused Employee
Genius
1 Over-Production
2 Over-Processing
3 Excess Inventory
4 Defects
Waste Procurement Perspective
Over-Production The collection of ‘just in case’ information, PO processing bottlenecks
Over-Processing Unnecessarily bureaucratic signoff, approvals and review processes. Overly complex RfX methodology
Excess Inventory Ordering inventory or services too early, backlog of PO and contract requests
Defects Paperwork errors, rework of administrative processes, supplier errors and quality issues, inaccurate supplier contracts needing amendment
Transportation How quickly and seamlessly documentation travels through the buying process
Wasted Motion Inefficient workflows internally and externally
Waiting Time Shortage of qualified personnel, internal and external delays in handling key documentation
Unused Employee Genius Purchasing personnel spending too much time on administrative rather than strategic tasks
Eliminating non value add activities THE 8 DEADLY SINS OF ‘WASTE’
Procurement change agents will target waste internally and externally
1. Confirm business requirements
2. Agree on priorities
3. Engage with the supply market
4. Negotiate the best deal
5. Recommend, authorise & award contract
6. Manage contract deliverables
7. Manage supplier relationship
The Procurement line of sight
1. Prospecting
2. Discovery
3. Present solutions
4. Meet objections
5. Negotiate
6. Close & gain commitment
7. Manage the account
The Sales line of sight
They will minimize the costs of selling to their organisation
How the Procurement and Sales
processes correspond and conflict
Confirm
requirements Agree on
priorities
Engage
market
PROCUREMENT Negotiate
terms (VfM) Award
contract
Manage
deliverables Manage
relationship
Meet objections
Prospecting
Discovery
Present solutions
Negotiate Close and gain
commitment
Manage
account SUPPLIER
They will look for continuing improvements in a structured way
Thinking long term
Offering leadership
Seeking expert guidance
whenever required
Investing in ongoing education
and training
Proactively addressing
resistance to change
Focusing on corporate goals
Ensuring active stakeholder
involvement
Measuring progress on an
ongoing basis
They will approach their stakeholders as a business person in a procurement role
There are many different
types of ‘buyer’
Economic
Buyers
Often
has veto
What will the
performance
improvement
and ROI be
on this scope
of work?
User
Buyers
How will the
contract
impact my
work and
the teams I
manage?
Technical
Buyers
Often a
procurement
role
Does the
proposed
approach
deliver the
optimal
outcomes?
Ratifiers
Often a
senior exec.
with veto
Is this
the right
decision?
Advisors/
Coaches
Is this
supplier best
positioned
to deliver
what we
need?
Does this
scope of
work meet
my strategic
and/or
political
objectives?
Executive Buyers
Demonstrating strategic value through the lens of a supplier
If they focus on their services
and their pricing…
They are a supplier with a commodity.
If they focus on the features and
benefits of their services…
They are a supplier with some
added value.
If they focus on YOUR challenges and
how they can help…
They are a problem solver and
an important resource.
Can you spot the difference?
There isn’t one.
How do procurement professionals demonstrate strategic value?
They have the ability to build rapport at all levels
They are excellent communicators
They are good listeners
They have charisma
They have fantastic people skills
They understand their stakeholders key issues and their culture/preferred way of working
They can think on their feet
They can explain the technical aspects of
the procurement process in simple terms
They have great influencing skills
They are problem solvers and important resources
KEY TAKEAWAYS
Procurement must consider itself to be a change
management function
Commercial and technical skills are merely ‘table-stakes’ in this environment
The change management mindset is all about eliminating waste and continually improving
To offer strategic value you must be regarded as a problem solver
11th October
Statement of Work Expenditure The Perfect Stage for an Entrepreneurial
Procurement Professional
How to apply some of these ideas specifically to
statement of work/consulting expenditure
Please come and visit me on
the Kelly Conference Stand
KEY NOTE PRESENTATION
PASA Premier Confex
• Understand what change management is and the business mind-set that procurement should cultivate in
this spend area
• Become more effective at diagnosing and managing change within the core procurement process(es)
• Develop the self-awareness to embody the role of the change agent in the eyes of key stakeholders
• Use actionable frameworks and tools to increase success rate
• Use storytelling techniques to structure communications more effectively
• Handle resistance and conflict productively
• Develop a personal and local team action plan that can be applied immediately back in the workplace.
To find out more about the session and reserve your place contact [email protected]
TWO DAY WORKSHOPS
Procurement Influence and Impact
QUESTIONS?
Thank you for your time!
