Innovation Summit Part 2 – Procurement’s Roles Will Be Driving Innovation, Supplier, Customer and Stakeholder Relationships

Yesterday in Part 1, I gave an overview of the main themes of the Tradeshift Innovation Summit in Copenhagen recently. Today, I’ll let you in on some of the innovation theories I learned about for procurement. But let’s start with the time I spent with the Product team, learning about Tradeshift Buy, Tradeshift Pay and Tradeshift Go, and the journey (on both the buyer and supplier side) from sellers adding products to their online catalogues, to buyers accepting them and ordering them, to approvals, payments, and buyers submitting a form for some more complex services.

Intuitive, ease-of-use and a snazzy machine-learning chatbot, called Ada, all on single screen, was the message I got. Built on a single platform, it does feel seamless. There were no significant product announcements during the event, but this is a company looking to make its mark on innovation.

The event was peppered with talk of designing for outcomes, removing decisions, stories like Segway being sold to a Chinese company who turned the tech to developing electric scooters which sell many thousand per city, and Dr Ulrich Piepel, VP Global Head of Procurement for Innogy, stating his team KPIs are not savings-based but automation-based (how much is his team automating) left us in no doubt that we are going to see some exciting stuff coming from Tradeshift.

A truly interesting speaker came on at the end of Day 1; Angela Ongutala a futurist talking about designing for change. The first rhetorical question she gave us at the top of her 40 minutes was: “Is ownership dying?” Photos brought the baby clothes range VEGA to us, a clothes rental service, followed by a car subscription service, then time banking; one hour of a person’s time is traded for another’s of a different skill. Move to ‘Will we pay for privacy?’ If we think of why these questions are being asked it's because we're in a state of deep transition, explains Ongutala.

“What if we could do ‘XYZ’ differently and ‘how could it be different? That, she explains is how innovation starts. Translating to real examples: Amazon Go (you walk into a shop, pick up what you want and walk out; what you selected and your features are recognised and your Amazon account debited). KFC are trialling chicken bucket sales via smile recognition! Yikes! Our imaginations ran wild and I think there was a collective whirring in our brains on the art of the possible.

Almost the last words of the event came from Amy Fong from The Hackett Group, who spoke with meaning on the topic ’Procurement’s imperative for change.’ It was an insightful presentation with useful takeaways. Underpinning Fong’s angle on how the world of business is changing was the stat that in the 1970s companies would be on S&P’s top 500 rating for 30 years, and now it's 15 years.

The churn rate of companies has doubled. Though digital transformation is key to company success, it goes hand in hand with finding new ways of doing things, being customer-centric and adapting to the velocity of change. From her perspective, companies aren’t really there yet on innovation: we're learning, but implementation is still pretty low. For example, supply chain financing and dynamic discounting uptake is still low: 23% and 16% respectively. In The Hackett Group’s research, 49% say processes aren't efficient enough to handle treasury solutions, which is perhaps more concerning. Fong’s call to action was to take risks, if we fail, don't penalise, and try again. Always consider partnering as a way forward.

She linked her advice back to Tradeshift’s early mantra of connecting all businesses worldwide, by encouraging us to start with interconnectivity of data, information and communication, including partners and suppliers, and not to be afraid of external sharing.

Back to the procurement function, what does Fong consider as our place in the world of change?

Structured processes, for example AP, will be fully automated and we should only be handling exceptions. Our teams around such processes will reduce by half, but that doesn’t mean the procurement function will shrink in terms of FTE, it will mean that roles will become much more focused on driving innovation, supplier, customer, and stakeholder relationships. People innovating with people. Good news! Unlike some of these presentations, Fong’s tips to get us started were worthy of note. Firstly, make sure you know your stakeholders' priorities, pilot ideas and learn. Take a look at your strategy and roadmap, with a digital eye. Educate the organisation and keep teams updated on what is happening in the industry. Continue to align with your stakeholders as objectives often change. Finally, know your talent.

Fong left us with a challenge for our own organisations. CFOs should put more resource into procurement because therein lies the biggest bang for your buck that an organisation will get; with our CFOs we just need to figure out what that bang is!

All in all, it was a well themed event and Tradeshift will I’m sure be delighted with the outcome. I expect next year’s event will reflect and build on the innovative positioning, likely we’ll have some exciting product news from them before that. I think we can expect more customer, partner and supplier collaboration and innovation in the process, with the aim the grounding principal of Tradeshift of connecting all businesses in the world. In the frank and direct words of Christian Lanng, “We all have power to innovate, we just have to piss a few people off to know we’re doing it right.”

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