At the recent Procurement Summit in Manchester, we had high expectations of the keynote from Remko van Hoek, and we weren't disappointed. Titled “Pathways and Pitfalls for Procurement Progress”, it combined some strong strategic thinking with carefully considered advice to practitioners, aimed at giving the delegates ideas that could be implemented whatever the current state of “procurement maturity” in the organisation.
Remko started by talking about SRM (supplier relationship management) and supplier collaboration, with some data collected from a survey run at a previous conference. It showed that SRM is not used in a very sophisticated manner in most organisations – for example, only 30% of respondents “ask suppliers about business issues they see in our company” and only 46% “listen to and learn from suppliers”. A mere 17% “know how our suppliers segment us as customers”, so some way to go in terms of best practice.
Have things moved on in the couple for years since this was undertaken? Probably not, van Hoek suspects. And he made a comment that really resonates with us after this season of various conferences: “everyone knows that procurement is all about value”, and yet putting that into practice, actually implementing the procurement ideas and strategies, seems so difficult for many organisations.
He then introduced “the ladder of procurement performance”, based on another piece of research - he says that leaders want to move "beyond strategic sourcing and a largely internal focus". They still care about risk management, staff development and wider cost management, but they really aspire to get into SRM / supplier collaboration, grow the top line of the business and drive innovation.
But, as he said, too often procurement leaders “fall off the ladder”! Why is that? These are the reasons that are often quoted:
- We don’t have the time or the technology
- Our stakeholders are not engaged
- We need different skills
- Where are the savings on the P&L (lack of credibility)
- We’re not invited in on time
He then offered four “solutions”, illustrated by examples of firms that have had some success.
Account management in the business – align with the business cycle, not the sourcing process. Ask how you can help the business to make next year a success. Establish KPIs – the business definition, not yours, and reporting should be "by the business, on business benefits".
New levels of supply chain visibility – use proactive risk watch and alerts, not solely operational or financial. Consider multiple tiers, beyond what you can see currently at the first tier.
Career life cycle talent management – ongoing focus from on-boarding people to upward and outward management. Take executive ownership, raise the bar on development to appeal to future leaders, and tie programmes to strategic workstreams to create stretch opportunities. See it as a positive if top procurement talent moves into the business.
Take SRM seriously - have a structure and a repeatable process. Make sure suppliers get feedback, be open about what you want, and admit what you don’t know – even if that goes against the procurement grain.
There was more but that gives a sense of how much useful content van Heok provided, and we may come back to his valuable “take-aways” at another date. But it was an excellent session, and the large audience seemed to appreciate it. And it really got us thinking about this question of implementation – more for us to ponder on here in coming weeks.