Investigo’s Procurement team hosted a roundtable discussion on Wednesday 27th May to discuss sharing best practice during the COVID-19 crisis. The latest in our series of knowledge sharing webinars for senior procurement professionals, the event featured contributions from leading CPOs and heads of procurement from across our network. It was hosted by Gareth Paul, Associate Partner and Angharad Kenward, Senior Director.
Continuing collaboration and innovation
If there’s one thing that this challenging time has taught us, it’s that we can work together when we have to. We’ve seen competitors joining forces for the greater good and the public and private sectors working in tireless unison to get key equipment to the workers who need them. But once the dust settles, will this kind of collaboration and innovation creep back to the backburner?
“I think it will be heart and head,” said Jane Baskeyfield, Programme Lead, Global Procurement Transformation for Dyson. Companies’ current need for collaboration with their supply base “will be challenged and compromised as we move out of crisis mode. We’re more collaborative by instinct and immediate necessity, but what will happen when cost base becomes our priority? There’s the danger we lose sight of the benefits of collaboration and go back to looking after number one.”
Cross-industry collaborations have been signs of wider-reaching change in the traditionally conservative pharma sector. Andrew Baker, a senior procurement leader, cited the tie-up between AstraZeneca and Oxford University. “Some ways of working will continue,” he said. “Collaboration between a large pharma company and an academic organisation sets a precedent of where the business is going anyway. This might accelerate that. Tie-ups between two different companies in the healthcare industry, like GSK and Sanofi, I can’t see continuing long term. It will depend on the nature of the relationships and what’s viable. There’s an inherent danger that we revert back to the old ways of working.”
“The word ‘collaboration’ goes beyond conversations with supply chain,” said Jason Simms, Head of Outsourcing, Procurement, Cash and Credit Management for DAS UK Group. “If you’d said 10 weeks ago that the world would be working from home, a lot of people wouldn’t have believed you. I don’t think communications and collaboration have been stronger than they are now. ‘How are you and how is your business now’ are almost the first things people ask and it’s genuinely nice. The world has changed. Collaboration is getting stronger and better as a result of this.”
Although collaboration has been a necessary and positive offshoot from these challenging times, will we see longer term change or will companies revert back to type? Perhaps current working arrangements are effective for the short term, but will need more thinking in order to be sustainable over a longer period. “Traditional offices are not really geared up for this,” said Jason. “There are values and beliefs which I genuinely think are going to change.”
“Under cost pressures, business models change,” said Michael Foyo, Vice President of Direct Procurement for BT. “In order to transform our customer cost face, it comes down to collaboration with different product units and sales teams. I see us being more embedded in how we deal with stakeholders. We need to have closer relationships in our collaborations with our suppliers. It’s not so much a change in relationships with other parts of the business but a change in emphasis. A lot more customers will focus more on cash. How does procurement help to drive that agenda? The COVID situation will make companies look at risk – you’re only as strong as your weakest link.”
But knowing how procurement can drive the risk agenda is not an easy question to answer. “It would be easier to give you six numbers for the lottery,” said Jason. “You don’t know what you don’t know. The collaboration piece is key to minimising the risk. We sit at the forefront of steering the conversation in an outsourced environment or being a trusted advisor to the leadership team. Sharing best practice in forums like this will be absolutely key to managing risk.”
There was a feeling that corporate practices change very much with the requirements of the situation, rather than with a view to improved future business practices. John Everett, EMEAI Purchasing Director at Dow Chemical, said, “whatever the situation, the subject is very contemporary for a certain period of time. Then the desire for growth overtakes risk. Cash, cost, risk and growth are what we need in a balance scorecard. When there’s not a disruption, who’s worrying about risk enough? It becomes a small quadrant dominated by the others. We’ve seen it in disruptions for the last 15 years. We saw it in 2008. 18 months later it was not even on the agenda.”
“It disappears when BAU kicks in,” said Angharad. “This is how we get on the agenda, visibility at board level. It will be interesting to see if procurement stays on the agenda permanently.” There’s the argument that a company’s industry sector is a big factor in its approach to risk. Angharad felt that the financial services sector is probably the most mature in supplier risk due to its strong regulatory focus. Andy cited pharma and life sciences as industries where risk management is high up on the agenda, both in procurement and in the wider supply chain. “In other industries where it’s less of a priority, as soon as the crisis passes it falls off the agenda. The amount of regulation in an industry is a big factor.”
Tech as an enabler
“The necessity to innovate keeps me in a job,” said Jason. “But you have to deliver good thought leadership.” While it’s clear that technology will continue to play a huge part in procurement in the new working world, its use has to be allied with a genuine understanding of its strategic role in the business. That is how procurement professionals can demonstrate their value to the board. “It will be highly predominant,” said Christophe Villain, Head of Procurement Excellence for Nestle. “It’s obvious that to gain a seat at the table, you need to understand priorities from a business perspective. We make our metrics a prison rather than looking at the key deliverables the board are trying to sell to investors. Don’t do digitalisation for data, do it to respond to a business priority or focus.”
Businesses need to think about which systems will provide greater efficiency in the way they work, or better insight into supplier prices to help inform negotiation. “I firmly believe many areas within procurement will be important,” added Christophe. “I can’t see tactical buying continuing. At Nestle, we’re using machine learning to better understand demand for our suppliers. The reports we’re sending to the board will be done by machine in future. The crisis is an opportunity. There’s a shift from a focus on ensuring supply, to a focus on ensuring profit is coming very fast. Tech is a means to accelerating this journey.”
“Automation is an agenda item we can influence,” said Jason. “The use of constructive data to drive business decisions, through AI and predictive learning. We’ll have to be agile enough to factor it into business decisions. It’s the intellectual property we bring to the table. We’ve got to adapt to what the business is doing and listen to where it’s going.”
Digital projects will remain high up on the agenda, allowing companies to identify where efficiencies are needed. “We’re looking at accelerating the sourcing piece,” said Christophe. “We’re automating wherever we can to ensure speed for buyers, and we’re reviewing our system landscape, especially in the area of e-auction. It’s outdated and requires effort. We’re launching services in indirect areas. PPE was hot on everybody’s journeys. Digital is here for that – it brings cost efficiencies and speed.”
It’s crucial that procurement professionals clearly demonstrate the wider value they bring to a company. Staffan Jacobsson is the Head of Indirect Procurement for V4 Pharma. In delivering pitches to the business, he’s found there’s an expectation that procurement will save the company money, and genuine surprise about initiatives that will save time.
But perceptions of procurement are changing, and that includes its profile. In pitch meetings, “you have a lot of eyes on you,” said Staffan. He’s recently seen several people from around the business asking to join procurement – “people with amazing subject matter expertise, who we’ve trained in procurement. I’m seeing a lot of questions from the team, category managers worried about what the future holds for their category, asking ‘will we have buildings in 10 years? Should my team be concerned about their jobs?’” Rather than being seen as a function that merely maintains business as usual, procurement’s now being seen as a viable destination for ambitious colleagues looking to use their skills in a different way.
However, now is not the time for procurement professionals to rest on their laurels. “I’ve been around for a long time, and there’s not a place where there’s any guarantee of the demand of your expertise or experience, so we need continued professional development, refreshment of existing skills and learning of new skills,” said John. He gave the example of being a category expert of handheld calculators 20 years ago. “It’s a fact of life – these things evolve and need to keep fit for purpose. It’s our fundamental agility. Applying the principles of lean and agile, including new methodologies in our toolbox. Lean and agile are things we can borrow very successfully from other functions. If you only want to use the seven-step linear process, guess what happened to the dinosaurs?”
“As a procurement professional, you spend years trying to squeeze costs from contracts in facilities management and property,” said Angharad. But with the current crisis and businesses looking to move back to the office environment, procurement is also involved in managing “hygiene and cleaning, one-way systems, retinal scans when people enter the office. While there are not so many properties in company portfolios, the category will evolve in very different ways.”
The return to the office
Our attendees’ companies have been putting plans in place for their return to the office. BT has been consulting very closely with Public Health England to create an office environment where people feel safe. While its buildings will have a lot less capacity, “face-to-face collaboration will be key to underpinning our business strategy,” said Michael. The company is going department by department to decide which priority functions need to return to the office environment and what that environment should look like. “Tech is invaluable for collaboration. If we’re not returning our entire workforce, how can we transform the digital experience for people and give them the tools to do the job in a productive way, despite not being physically in the office?”
BT is also consulting with its people to assess their appetite and comfort level, with a view to modernising its workplace strategy. Essentially, using COVID-19 as a catalyst for transformation. While remote working will clearly form a significant part of this, they’ll need to make sure everyone feels like part of the team, wherever they’re based. “We need some mode of physical collaboration. How do we integrate teams with different collaboration tools, whether in a meeting room, at someone’s desk, working from home? That will remain a challenge.”
John felt that businesses have “accepted the hybrid of home and the real office,” with working in a physical office becoming “more of a scarcity.” He added, “The way we onboard new staff, bring grads through and give them that learning, social and networking experience we’ve taken for granted, is now more virtual. You don’t need that legacy to be effective in a new enterprise. It doesn’t matter if they’ve never been to head office or never shaken the hand of the CPO.”
Mars is reformatting its entire graduate programme into a virtual proposition. Inna Abkelyamova, VP of Procurement, said “I genuinely believe that through certain experiments, we’ll come to a balanced virtual solution. I still believe some personal exposure to great talent or leaders means a lot. It’s all about creating opportunities for that exposure. You can still virtually shake hands but it will take time to reformat. It’s easier with the new generation. I see more appetite from newcomers to adapt to new ways of working. I struggled at the beginning as I rely on that personal connection, observing the people around me, feeling that personal and emotional connection in the room.”
There was a consensus that virtual working could actually make meetings more efficient. Andy felt that there’s now no need for meetings with “30 in a room and most just sitting there. With virtual meetings, there’s a greater sense of why we’re there. People spend hours in meetings and question the value.”
A new way of working
We now have a massive opportunity to embrace inclusivity, widening our skill sets and ways of thinking. For example, companies can now benefit from “Getting mums back to work as they can work remotely and flexibly, and people with disabilities who can’t travel to work,” said Angharad. Remote working could also be key to improving mental health, with many people being more productive and confident in their ability while working at home.
“We’ve noticed people are not working a traditional 9-5,” said Jason. “I’m loving the commute, but people are working longer. We need to have conversations with HR. If we think this is going to be the norm, we need to be mindful of people having to do a lot of different things. I’m happy for teams to have an hour or two or three during the day to do stuff, as I know they’ll pick it up. Pace yourselves. It’s a different rhythm of working.”
With people working on their own, however, it’s more important than ever that wellbeing is on the agenda. “You can’t just grab a person in the corridor and say you’ve had a bad day,” said Angharad. “The ups and downs feel more dramatic. Lots of organisations haven’t reacted to that well enough, because wellbeing is not on their agenda or they don’t yet have the required level of maturity.”
Companies have learned a lot since the start of the COVID-19 crisis and are putting those lessons into practice in their ways of working and increasing focus on digitalisation. As the procurement function becomes more prominent not only in getting the right equipment to the right place, but in setting corporate strategy during these challenging times, procurement professionals have a genuine opportunity to raise their profile and level of importance in the organisation. If you’d like to attend our next procurement webinar or you’d like to talk to us about your next procurement job or hire, please contact us.