Procurement in Practice — bp exec says ‘guided buying is the Holy Grail to make self-serve work’ (Part 2)

In Part 1, Mark Smith, Procurement Vice President, Digital & Talent Supply at integrated energy company bp plc. talks about his role, the role of procurement and his vision for procurement in the future. We ended on how he sees the future being self-serve for internal and external customers, and now explains how that can work.

Making self-serve work

In any implementation project, like the S2P one that bp is currently rolling out, there’s always the challenge of change management, especially for a user base as broad as that in bp.

“For the technical implementation you effectively have to move all the data and open POs, and that creates noise and challenges for suppliers and users alike. And one of the biggest hurdles is the category content, so catalogs, guidance materials, etc., so for me guided buying is the Holy Grail to make self-serve work. You need that simple way to help users match their need with the contracts and catalogs you already have in place.

“But it’s worth noting that once the technology is deployed and embedded, in our experience you can triple the amount of low-touch transactions. We now have 65% or all our transactions passing through our system in a low-touch fashion, eliminating the need to physically do something, like create a contract or release an order.”

Use what you’ve got — but better

A crucial step towards the digital self-serve future, is to add content to your spend management platform to get the best possible performance out of it, Smith believes.

“Using what we have but enhancing it with minor tech additions is the way forward,” he says. “For example, our intelligent sourcing plug-in effectively does the RFI, gets a price for something in real time and on an automated basis and turns it into a PO, all without procurement having to go to three suppliers for quotes and evaluating the bids. It’s massively quicker. We are still competitively buying but the saving is that we don’t have to invest any procurement time and effort into getting that value.

“Similarly, you might use a punch-out that maintains all your catalogues, finds the product required and comes back with a negotiated price and an agreement. All the data and payment then flows through your system like any other purchase.

“So your spend management system is the gateway to enable all the dynamic marketplaces you want – some of that will be through the foundation system, some will be bolted on, but to the end user the experience is seamless. There is no knowledge of the processes it’s gone through to tap into an ecosystem of providers, it’s just done quickly and procurement can focus on the value creation we talked about earlier.”

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Changing the perception of procurement

“The last thing someone wants to hear is that you must go and talk to procurement about your need,” says Smith. “But it’s not that they don’t value your contribution, it’s simply that we need to change our perception. It needs to change from ‘talking to procurement when you need something’ to ‘when you need something, it’s there without talking to procurement.’

“Rather, you will talk to procurement when you are planning your need. This is a big change, but it underpins the shift in the talent that we will need in the function for the future.

“For example, each time you need a software developer, you don’t want to go back and forth with procurement to ascertain who the good developers are, what their terms are, and how quickly they can be in situ. It’s a much richer conversation when you can tell procurement you’re going to need a certain number of software developers in the next three years, so that procurement can get the right suppliers in place who can respond in the right time with the right terms.”

And that requires talent

Mark believes there’s a big transformation ahead for the procurement function. “For anyone who began their career as a traditional buyer and negotiator, there’s more than enough space for people who are good at that for years to come,” he says. “But we are building out from that going forward. Procurement is investing in people who are solution builders, who are commercially creative, who can create revenue opportunities from supplier interactions, and who can scale up suppliers — there’s a lot more space for that than ever before.

“At the end of the day,” he says, “procurement is only a function of how well you service demand. Its future relies on people who are capable of engaging with the business to capture that demand and create solutions that place that in the market in the very best way possible. It relies on people who can understand the business, where it’s going and create supply options to support that. It relies on digital more and more and the ability to digitize your transactional environment, and that absolutely relies on the CPO’s ability to develop, attract and retain the right talent to create great strategies that will bring all of those things together to create value.”

Read previous CPO interviews in the rest of our series: Procurement in Practice.