Procurement Strategy

How to get buy-in for sustainable procurement

DeFariaLopes_Marais_150.pngBy Bárbara de Faria Lopes, Sustainability Consultant, IQbusiness, and
Christelle Marais, Sustainability Lead, IQbusiness

Financial factors are no longer the only consideration for businesses. Governments, investors, non-governmental organisations (NGOs) and society at large are increasingly holding companies accountable for their social and environmental impact. Organisations, therefore, need to identify and address sustainability risks within their own operations and supply chains. Sustainable supply chains require the implementation of sustainable procurement (SP) practices or the joint consideration of social, environmental and economic factors in an organisation's purchasing behaviour as well as supplier engagement.

The uptake of SP within South Africa and the broader African continent, unfortunately, appears to be lagging behind developed economies. To drive a change in procurement behaviour requires awareness, buy-in and a compelling business case. Here are five principles to achieving this:

E-Commerce growth makes effective packaging procurement critical

SarahScudder_100.jpgBy Sarah Scudder, President and Chief Revenue Officer, Real Sourcing Network

Every year, companies spend billions on packaging for their products. According to a recent research report by Smithers, the value of the global packaging market was $917-billion in 2019. It will grow to $1.05-trillion by 2024.

The cost of packaging depends greatly on the types of products a company sells. Packaging costs also vary based on the types of materials used and complexity of packaging designs. Because of these differences, packaging costs can range from less than 2% to 10% or more of total product cost.

SA procurement is going digital, but for many their processes are not ready for it

DigitalProcurement_200.jpgA good number of South African organisations find themselves in precarious positions when it comes to procurement because they have yet to properly integrate their basic processes and their weaknesses have become more evident during a time that limits peoples' movements and physical contact.

The global COVID-19 pandemic has changed almost every business process and for procurement, it has exposed the need to improve existing processes and pressured organisations to incorporate digital solutions as remote working has become a norm for the foreseeable future.

In a recent survey conducted by software development company Oxalys South Africa, in partnership with the Chartered Institute of Procurement and Supply (CIPS) and Smart Procurement, entitled: Post Covid-19: Procurement Key Priorities and Challenges in the Digital Era in South Africa, it was established that although there might be a lack of maturity in the South African procurement space, there is a real will to make it a strategic function, especially in the wake of the challenges brought on by the pandemic.

In fact, many South African organisations have not shied away from adopting digital solutions to streamline their business processes. It is a trend procurement must follow because current and future circumstances continue to demand automation for improved processes.

However, South African organisations must adopt the right path and a practical solution to digital procurement.

Top five spend analytics measures for procurement managers

ErinMcFarlane_100.jpgBy Erin McFarlane, Vice President: Services, Fairmarkit

If you have recently joined an organisation or moved into a new role that is directly related to procurement, it can be challenging to know where to start. Even if you have been in the role for a while, the whirlwind of daily activity can distract you from having a strong holistic view of your organisation's relationship with its supply base.

There are hundreds of valuable metrics to help you better understand your company's supply chain. But like any professional, you have limited time and reporting requests can distract your team from critical activities. If you are in procurement and trying to better understand the commodity or category that you have been assigned, understanding the numbers is especially important to getting off to a great start.

Here are the top five spend analytics measures, along with how to define them, where to find them and what influence they have on your company:

The fallacy of discounts in software negotiations

BillHuber_100.jpgBy Bill Huber, Partner: Digital Platforms and Sourcing, Information Services Group

One of the most common questions enterprises ask about software spend is whether they should benchmark the discounts they receive from software publishers. Whether they are buying from Microsoft, Oracle, SAP, ServiceNow, IBM or others, the presumption is that a higher discount is better, which is true to a degree. However, the sales approach taken by software publishers is highly sophisticated, with less-than-transparent elements designed to maximise spend. The truth is that a premature focus on trying to get a higher discount on a software license or subscription on the part of an enterprise buyer can lead to paying too much.

Hear more IT insights from Bill at the upcoming SmartProcurement World IT Sourcing Summit on 03 June 2021
PRESENTATION | Priority Objectives for IT Sourcing Strategy

Demonstrating the value of marketing procurement

SarahScudder_100.jpgBy Sarah Scudder, President and Chief Revenue Officer, Real Sourcing Network

In 2020, the World Federation of Advertisers (WFA) published an important report on the current state of marketing procurement. This report is part of an ongoing initiative called Project Spring that is being led by the WFA Global Sourcing Board. The Project Spring initiative's goal is to "transform the value proposition of marketing procurement".

The first portion of the WFA report describes the results of a 2018 survey of senior marketing procurement executives that examined how marketing procurement functions are structured, how they operate, and how they are perceived within organisations and by external partners. The balance of the report focusses on what marketing procurement professionals need to do to increase the value that they create for a business and to enhance the perception of their work.

Based on the survey results and several subsequent workshops involving groups of marketing procurement professionals, the WFA identified four categories of challenges that must be addressed to enhance the perception of marketing procurement: process, people, performance and partners.

Procurement needs less processes - as they are slow, boring and self-centred

Sammeli_Sammalkorpi.jpgBy Sammeli Sammalkorpi

During the past few months, I have discussed with a number of chief procurement officers (CPOs) how they have managed procurement during COVID-19. One recurring answer was along the lines of 'we broke all of our processes and went into wild-west-mode'. Now, many said this with an interesting combination of sadness and pride. Sadness that they had to give away great processes perceived to be the basis of any professional procurement organisation. Pride and excitement at how procurement teams were able to improvise, work hard and survive.

How a data-enabled supply chain can help the vaccine rollout

KevinSample_100.jpgBy Kevin Sample, Senior Consultant at healthcare supply chain firm GHX

As COVID-19 cases continue to rise, the spotlight is once again on the healthcare supply chain

The rollout of the COVID-19 vaccine has once again put the global healthcare supply chain under the magnifying glass. As inoculation programmes are established, the demand for full vaccination kits, which include syringes, glass and personal protective equipment (PPE), is likely to put strain on the supply chain. If not addressed properly, this could lead to delivery delays and critical supply shortages similar to those seen earlier this year. So, what can hospitals and other healthcare providers do to mitigate the supply chain risk they faced at the onset of the pandemic?

A large part of the answer lies in how they use data.

Sales trends for 2021: procurement needs to be solutions salespeople too

SueBarret_100.jpg

"One of the sales trends for 2021 is procurement needs to be solutions salespeople too," says By Sue Barrett, Founder and CEO of www.barrett.com.au and www.salesessentials.com

Times are, indeed, changing with the procurement function becoming increasingly important as a conduit, an orchestrator if you will, for the co-creation of value with suppliers and internal stakeholders as well as right down the value chain to end-consumers and back again.

Procurement can no longer rest its case on 'lowest cost', 'cheapest price' or 'supply of goods and services'; it must assume responsibility for the creation and delivery of real value beyond price and general supply.

This sales trend highlights how the skills, knowledge and mindset of procurement professionals are being expanded to include the capabilities of highly-competent solutions sales professionals.

Perfect delivery: the new rules for survival, innovation and growth

SteveBanker_100.jpgBy Steve Banker, Vice President: SCM, ARC Advisory Group

Customer loyalty begins with excellent service and timely delivery. Companies have come under pressure to unify their buying experience across channels, capture orders easily, and deliver them rapidly and accurately.

When it comes to gauging the loyalty of an organisation's customer relationships, the net promoter score (NPS) survey typically represents best practice. The NPS is correlated with revenue growth and calculated based on responses to a single, simple question: how likely is it that you would recommend this company/product/service to a friend or colleague?

What can SPEED do to improve your negotiations?

By Lucy Patchett

A negotiation model has been developed encompassing steps to ensure that procurement professionals think "more broadly and deeply" about the process.

Colin_Linton_100.jpgColin Linton, Director at business training and consultancy firm Gidea Solutions, spoke to CIPS in the podcast SPEED Negotiation Process about the model that he has developed through his research into contract management.

Linton identifies a negotiation model he has called SPEED, based on the stages Strategy, Planning, Execution, Evaluation and Delivery.

He notes: "It's easy to assume that negotiating the contract falls broadly into three distinctions: before, during and after the negotiation is concluded. However, the risk of only looking at these three separate stages is that you may miss out on key steps that could help with preparation and enhance chances of reaching a better conclusion".

How can Procurement best align with Finance right now? A CFO perspective

AlignProcurementAndFinance_150.jpgRight now, as the COVID-19 pandemic takes its toll on jobs, consumer spending and the global economy, many businesses are scrambling to adjust to a new financial reality. They are also coming to terms with the fact that the path to recovery remains long and mostly uncertain. Experts, including Deloitte, predict that the United States (US) economy will not bounce back until mid-2021. The Bank of England is anticipating slower recovery, as late as the end of 2021, for the United Kingdom (UK).

Within organisations, the Chief Financial Officer's (CFO) voice is one of the most critical during a crisis. But contributing directly to a firm's financial resilience is the Chief Procurement Officer (CPO), who has a strategic role in leading a firm through the tough times ahead.

Spend Matters spoke with a CFO who has many years of experience across corporate finance and public accounting, and is currently the CFO of spend management firm Jaggaer. Spend Matters asked Jeff Laborde how he sees Procurement and Finance best working together to drive benefits across a business, given their natural overlap in priorities and responsibilities.

Procurement in a pandemic: top tips for tricky issues

AmyRyburn_LisetteHood_200.pngBy Amy Ryburn and Lisette Hood, from commercial and public law firm Buddle Findlay

Procuring organisations (buyers) are currently grappling with a number of tricky issues arising from the COVID-19 pandemic, including issues relating to both live and planned procurement processes.

Buyers who are facing significant uncertainty, or who are without the resources to effectively staff procurement processes at this time, are faced with difficult decisions, such as whether to continue with live procurement processes or whether to commence new ones; what to do if procurement processes are cancelled or delayed; and whether and how to address the influence of COVID-19 on tender documentation (in relation to the tender process itself and the contract that is released - in particular any proposed force majeure clauses).

How can maverick spend hurt your company?

MaverickSpend_150.jpgRogue purchasing can cost you plenty. PurchaseControl unpacks the implications of maverick spend and how you can tackle it.

Making headway in tail-spend management

TailSpend_200.jpgSupply management organisations have tended to ignore tail spend, considering it non-strategic. But as they realise the cost savings that can be derived, organisations are becoming more aware of their tail-spend management problems and are looking into solutions.

The Sustainable Procurement Pledge

#SSP_100.jpgImagine a world, where all people thrive on our planet. A world, where the immediate threat of climate disaster has been avoided and where global businesses have evolved their business models to support a responsible and low-carbon economy.

"Whilst it seems a bit far-fetched looking at today's realities, this world vision is possible and the millions of procurement professionals distributed across the planet are mission-critical in making this come true", says the movement behind the Sustainable Procurement Pledge, or #SPP, on social media.

Living in interesting times: procurement 2020

PartProcure_100.jpegBy Nicolette Emmino

We were not even at the end of Quarter 1 of 2020 when tariff wars seemed to be the least of our problems. Even before the coronavirus started to disrupt supply chains, procurement analysts had identified several things to watch out for and necessary transformations that needed to happen within the procurement world.

Here are a few things procurement professionals should be focussing on within their organisations this year:

Reinventing procurement: the case for new operating models

MatthiasGutsmann_New_86.jpegIn late July, Digital Procurement World (DPW) brought together some of the world's most progressive chief procurement officers (CPOs) for a virtual roundtable discussion on how the ever-changing digital environment can help procurement challenge the status quo and design operating models that deliver both innovation and value.

Matthias Gutzmann, Founder of DPW, gives us the key takeaways from this discussion:


 

 

Career opportunites

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Job purpose We are looking for a Procurement

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GROUP PROCUREMENT MANAGER

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Operating out of Johannesburg, this is a key

Tutor and Coordinator

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Are you a Commodity Manager looking for the

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One of South Africa's leading, mining companies is