The 2024 ProcureTech100 highlights the most innovative and customer-centric procurement technologies that are reshaping the industry. And in conjunction with this year’s PT100 launch we are sharing exclusive PT100 content to help you prepare for the year ahead.
Our 8 digital procurement trends for 2024 identifies those key technological gamechangers shaping the future of digital procurement at large – and their influence is particularly evident in this year’s winning solutions of the PT100.
We have also gleaned some incredible insights from those at the cutting edge of the procuretech transformation to see how they are predicting the future of the function, and its transformation. You won’t be disappointed.
We meet Damon Ascolani, SVP, Head of Global Procurement, Facilities, Real Estate, and Travel at the global credit reporting agency TransUnion to see how procurement there is evolving into a trusted business enabler…
TransUnion LLC delivers a highly prized product. Trust. Whether you’re a financial institution looking to loan money, or a consumer looking for credit education tools, TransUnion is able to provide the necessary assurances needed for both parties to move forward, with confidence. As TransUnion puts it: “We’re committed to ensuring every individual is reliably represented in global commerce so consumers and organizations can transact with confidence and achieve great things. We call this Information for Good.”Read the full story here!
The past 20 years have seen some radical changes to the ways organisations structure and operate their value chains. Financial crises, geopolitical conflict, digital transformation, worsening climate change, and the jarring impact of the COVID-19 pandemic — have all profoundly altered the way companies navigate the procurement process. For those working in the procurement sector, the world looks very different compared with the one at the turn of the millennium. So too does the procurement process.
ORO Labs: Solving procurement operations challenges
ORO Labs is the procurement orchestration platform for modern companies. It is on a mission to make processes better, faster and more agile in procurement and supply chain. ORO offers self-driving workflows which enable more efficient, collaborative, compliant purchasing with a personalised user experience and smarter decision-making.
Dharani Jeyaprakasam is a Solution Design Architect at ORO Labs. Having previously served 17 years at IBM in a variety of roles, Jeyaprakasam joined ORO Labs after feeling dejected about whether orchestration mattered to the world. After speaking with CEO and founder Sudhir Bhojwani, she realised she wanted to join the journey. “I was just blown away by the passion that Sudhir showed. This is especially when it comes to the problems we were trying to solve,” explains Jeyaprakasam. “There was this honest person trying to give me the same information that I felt myself. He was honest and accepting that there is a flaw in the product and that is what we’re trying to fix. And that honesty was the real attracting factor for me.”
There were many inspiring themes on peoples’ lips at DPW Amsterdam 2024, including collaboration. One of the major reasons procurement…
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There were many inspiring themes on peoples’ lips at DPW Amsterdam 2024, including collaboration. One of the major reasons procurement professionals flock to DPW is the opportunity to learn from their peers, strategise with them, and make connections in order to partner up and grow. We sat down with Dr Matthias Dohrn and Sudhir Bhojwani, business collaborators of several years who prove the benefits of coming together for growth.
Dohrn is the CPO of BASF, a global chemical company, making him responsible for direct, indirect, and traded goods. Prior to this role he headed up a business unit – and things weren’t going well. It got to the point where the question of how to drive performance became a priority. The business needed to consistently drive value, not just be, in Dohrn’s words, a “one-hit wonder”.
“I’ve been in a lot of meetings where people come together and say, ‘we should do something’ – but the next month, you have the same meeting and nothing has changed,” Dohrn explains. “Structuring an organisation in a manner that really drives and extracts value, that’s key.”
This eventually led to meeting with ORO Labs and asking how it could help BASF build a solution that enabled the growth it needed. Sudhir Bhojwani, CEO and Co-Founder of ORO Labs, knew Dohrn already from his SAP Ariba days He even credits him with explaining what ‘supplier management’ means. When he co-founded ORO Labs, his team wanted to focus on being a procurement orchestration platform and build smart workflows.
“When Matthias was running his business unit, as he mentioned, he had this Excel-based process where he was running thousands of measures,” Bhojwani explains. “It was an interesting process. We let him know that our workflow could solve his problems way more efficiently. So we worked with this business unit at that time and saw some positive results. Roughly a year later, Matthias took over as CPO and wanted to bring in the same structure that we’d implemented at the business unit, but on a bigger scale.”
Kicking off the project
Getting this project off the ground meant having a business case, first and foremost. This required actually sitting down with the people who do the ordering, because procurement needed to understand the options it had. “So, with every plant in BASF – all approximately 150 of them – we had to talk to them, and look at the individual spend of each plant,” Dohrn explains. “This included direct procurement of raw materials, energy, logistics, indirect spend for services, and so on. Then we had brainstorming workshops, generating between 30 and 50 improvement measures per workshop.
“Then, because it’s bottom-up, you bring in the performance management tool to prioritise the measures. Then you go through the business case and confirm the value. As these measures go through the implementation levels, it’s very satisfying because you can see how you’re making progress in driving value every day. The people who own the measures set the timeline themselves, and there are incentive schemes behind the best ideas.”
Driving value to motivate people was a priority from the start, and something BASF discussed with ORO Labs early on. People are able to see the status of their measures thanks to ORO Labs, which means they’re able to see the results and also see other peoples’ great ideas. “You create a wave of people who are driving value, much faster,” Dohrn adds.
Addressing the challenges
From Bhojwani’s perspective, there were multiple challenges when approaching BASF’s requirements. Fundamentally, ORO Labs was building a brand new workflow, as BASF required a very different take on what that means. ORO understanding how that translated to what BASF needed was the first challenge.
“We needed to understand the structure Matthias has, and what the work streams should look like,” Bhojwani explains. “We had to figure out how to model these work streams within our tool in a way that made sense. An indirect work stream is not the same as something in direct material; those things are very different. So here’s where our workflow tool worked quite well. We could customise how direct material work streams should behave, compared to indirect work streams, how country A should behave compared to country B, and so on.
“It was important that we could bring flexibility, and that we could solve workflow problems in innovative ways. Another challenge was the user experience part. We had to make sure that the system worked for everybody, otherwise nobody would participate in the system. We had to keep working on it, keep fixing it, and that took a good 18 months of tweaking. The biggest thing has been understanding how BASF actually generates value, and how a workflow can help. It’s been very interesting.”
Identifying the value
Collaborating with ORO Labs has unlocked an enormous amount of value for BASF. Dohrn has seen the business come together thanks to the work that was put into communicating and collaborating with every site across businesses and functions, and BASF is continuing to conduct workshops for further improvement. There’s also, of course, the EBIT being gained from the business cases, putting BASF on track to generate sustainable savings.
“There’s been a real mindset change,” Dohrn states. “We’re now really focused on value, and we’re using this ORO Labs tool to hold each other accountable. You can see the progress every day. We call it the iceberg because you can see below the implementation levels. Everything starts off below the water line – no value created yet, just potential. Then you see it moving beyond the zero line into the positives, and every day I can see the difference between now and yesterday with just a click. It’s so fulfilling to see what we have created.
“We’re able to see the interaction with the plants, the interaction between people, and interaction with the requisitioners, and we can create something positive together. I think that’s huge. It’s only going to bring more and more value over the next few years. People are used to the tool now, they find it easy. It has created value and everyone’s happy because the cost pressure on the plants has gone down.”
Tonkean is built differently. Tonkean is a first-of-its-kind intake and orchestration platform. Powered by AI, Tonkean helps enterprise internal service…
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Tonkean is built differently.
Tonkean is a first-of-its-kind intake and orchestration platform. Powered by AI, Tonkean helps enterprise internal service teams like procurement and legal create process experiences that transform how businesses operate. The transformation hinges on four key functionalities, intake, AI-powered orchestration, visibility, and business-led configuration (no-code), which internal teams leverage to use existing tools better together, automate complex processes across teams and tools, and empower employees to do better, higher-value work.
Jennifer O’Gara is the Senior Director of Marketing, Director People and Talent at Tonkean. O’Gara’s route into procurement came when Tonkean became active within the space. “While we initially focused on solving complex process challenges across entire enterprises, we quickly realised how much procurement could benefit from this approach,” she explains. “Procurement processes are inherently complex and collaborative and cross-functional, making them a perfect fit for Tonkean’s orchestration capabilities. We were right. Since we entered the market, we’ve been blown away by how enthusiastically process orchestration has been received. That’s keeping us excited about procurement.”
This year, DPW Amsterdam 2024’s theme was 10X, with a focus on the importance of companies aiming for a moonshot mindset instead of an incremental approach. As far as O’Gara is concerned, achieving 10X improvements in performance is within reach for procurement, but it requires a shift in how the function thinks about growth. “It’s not just about doing more of the same faster—it’s about fundamentally rethinking the processes that drive your business,” reveals O’Gara. “Your processes are like your company’s infrastructure. When you optimise at the process level, you don’t just create incremental gains; you can fundamentally transform the way you operate at scale. You can remove bottlenecks permanently, facilitate easier collaboration org-wide, and drive true, reliable automation across all your teams and systems. The result is exponential performance improvements that can be sustained over time. Aiming for 10X isn’t just a lofty goal—it’s achievable. The key is focusing your improvement efforts at the process level.”
However, the journey to 10X isn’t straightforward. Some organisations believe they can just layer new technology on top of old processes. According to O’Gara, this won’t unlock 10X growth and will still leave your company lagging behind. “Getting to 10X starts, instead, with building better processes—and moving away from the idea that any one technology will do the trick,” she says. “For example, AI. AI is powerful, but it’s just a tool, and it’s only valuable if used strategically. To truly unlock 10X improvements in performance, you need to integrate technologies like AI into your core processes in a way that’s structured, strategic, and scalable. You will only ever be as innovative or adaptive or as effective as your processes are dynamic, dexterous and dependable. How do you build better processes? That’s where process orchestration comes in.”
Process orchestration refers to the strategy — enabled by process orchestration platforms — of coordinating automated business processes across teams and existing, integrated systems. These processes can facilitate all procurement-related activities. Importantly, they can also accommodate employees’ many different working preferences and styles.
Instead of simply adding to an organisation’s existing tech stack, process orchestration allows companies to use their existing mix of people, data, and tech better together. One promise of process orchestration is to finally put internal shared service teams like procurement in charge of the tools they deploy.
This goes a long way towards solving one of the enterprise’s most vexing operational challenges: the inefficiency of over-complexity born of too much new technology. It also allows procurement teams to truly make their technology work for them and the employees they serve. As opposed to making people work for technology. Process orchestration breaks down the silos that typically separate working environments. No longer do stakeholders have to log in to an ERP or P2P platform to submit or approve intake requests, just for example. The technology will meet them wherever they are.
“It helps you create and scale processes that can seamlessly connect with all of your existing systems, databases, and teams, while accommodating the individual needs of your employees and meeting them in the tools they already use,” adds O’Gara. “Orchestration allows you to automate processes across existing systems—like ERP, P2P, and messaging apps—so data flows automatically between them. It allows you to surface technologies like AI when and where they’re most impactful for stakeholders.”
Speaking of AI, it remains one of the biggest buzzwords in procurement. Indeed, anything that offers Chief Procurement Officers cost savings and efficiency will prick their ears, but the question remains: can the industry fully trust it? O’Gara believes it is ‘overhyped.’ “When it first emerged, it wasn’t just seen as a new tool—it was almost treated like magic,” she explains. “The hype still hasn’t died down, and that’s been a problem. It’s created unrealistic expectations and skewed perceptions of what innovation with this sort of technology actually entails; I can’t tell you how many procurement leaders have admitted to us that they’re getting pressure from the C-suite to invest in AI-powered tools just because they have ‘AI’ in the name.”
While clear with her scepticism regarding generative AI’s current place in the market, O’Gara recognises its potential. “Generative AI’s potential is huge—especially if it’s deployed strategically at the process level,” she reveals. “It could truly transform procurement, shifting teams from transactional roles to strategic partners who are involved early in the buying process and appreciated for their unique expertise—and for the unique business value procurement alone can deliver. But AI on its own isn’t going to save procurement. The reality is, many organisations jumped into the AI hype without a real strategy, and that’s why they haven’t seen its full value yet. The key is integrating AI thoughtfully into core processes—that’s when we’ll start seeing its real potential.”
With an eye on the future, O’Gara expects the next year to continue to revolve around AI adoption, but in ways that deliver real value. “I think we’ll see procurement truly stepping into a more strategic role, with businesses recognising procurement as a key partner, not just a back-office function,” she says. “This shift will be driven in part by new technology, especially process orchestration and AI, helping procurement bridge gaps in communication and collaboration across teams. Another big trend will be the rise of personalised, consumer-like experiences in procurement—making buying and approval processes smoother, more intuitive, and better tailored to the needs of individual users. It’s an exciting time, and we’re just scratching the surface of what’s possible.”
It’s impossible not to be inspired by the energy at a DPW event. DPW Amsterdam 2024 was buzzing with that…
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It’s impossible not to be inspired by the energy at a DPW event. DPW Amsterdam 2024 was buzzing with that same energy, its attendees soaking in information and inspiration from speakers, peers, other experts. We caught up with Rujul Zaparde, Co-Founder and CEO of Zip, at the event to dive into the procurement landscape and chat about the specific qualities DPW brings to the sector.
Zaparde is the Co-Founder and CEO of Zip. At the beginning of Zip’s journey, Zaparde and his fellow founder, Lu Cheng, based the company around their own experiences as end-users of the procurement process. They took their lived confusion around having multiple intakes for a contract, for the purchase request, and all the different complicated components of the process, and created a solution.
“And so, we started Zip and created the category of intake and procurement orchestration. We’re very grateful to have been named the leader in the category,” says Zaparde, in reference to having just been named a category leader in IDC’s first ever Marketscape for Spend Orchestration.
So, as is often the case, procurement is something Zaparde fell into. In this case, he got involved with procurement specifically to solve pain points. Prior to Zip, he was a Product Manager and Cheng was an Engineering Leader, both at Airbnb; they knew very little about procurement. “We were just end-users,” he explains. The upside of this was that they were able to come into the industry fresh, without the baggage and legacy issues that can come with being in a sector for a long time.
UX first
“At Zip, we really try to take a user experience first approach,” Zaparde continues. “What we found is the highest leverage change you can make in any procurement organisation is to make it easier for your employees to actually adopt and follow whatever the right process is. If you do that, then all of finance, procurement, accounting, and even IT find that they’re suddenly swimming with the current, not against it. And you can’t do any of that unless you solve for user experience.”
Taking away problems, the way Zip does, also takes away a barrier to ambition. The theme of DPW Amsterdam 2024 was 10X, a term on the lips of many across all sectors. Once immediate issues and pain points are addressed, 10X is something businesses can aspire to, with many talks and workshops during DPW Amsterdam focusing on how to approach this.
Getting the mindset right
For Zaparde, 10X thinking is a necessity for growth. “You have to aim for 10X to even end up at something X,” he explains. “That requires ambition. I also think that when you think in terms of 10X, and your mindset is angled towards incremental change, you’re much more open to thinking of solutions that are perhaps a little more risky. It changes your perspective.”
A mindset shift needs to happen before anything else. This involves considering the needs of procurement and the wider company, having a north star in mind, and then breaking changes down to an incremental level.
“Then you can start to think about the steps you need to take to get there,” Zaparde explains. “A big component of this is bringing along your peers and stakeholders across every function that’s tangential and critical to the core procurement workflow and path.”
Innovating for good
The work Zip does is indicative of the shift towards continuous improvement and advanced technology that procurement has been going through in recent years. There are things that are possible now that weren’t possible even a year ago, thanks to the vast innovations being made. One of the hot topics right now is generative AI, something that’s opening up a world of possibilities.
“It’s the elephant in the room right now,” says Zaparde. “With the capabilities that gen AI unlocks, you can automate a lot more. That allows you to cut down a lot of the transactional and operational work that procurement and sourcing organisations are doing. Procurement is tired of the status quo. It’s been an underserved function for over 20 years, and I’m glad that’s finally changing. I feel privileged for myself and Zip to be part of the conversation, and that we’re seeing all these amazing changes happening.”
Zaparde believes we’re already seeing the benefits of the major changes that have occurred over the last couple of years in procurement. In fact, he knows this, because Zip has helped its customers save around $4.5bn of spend over the last two years, which is an astonishing statistic.
“One customer of ours, Snowflake, achieved over $300m in savings alone,” Zaparde continues. “We’ve seen tangible benefits already. The way procurement is evolving isn’t a hypothetical thing – it’s really happening.”
Fragmentation on fragmentation
The key, again, is overcoming base level issues for the sake of evolution. This is precisely what Zip provides, after all. But sometimes, the issue is at a data level. Unclean data is something that technology leaders are talking about a great deal right now, with some feeling that it holds them back from implementing new technology. Zaparde believes that businesses should be questioning why their data isn’t clean from the start, rather than worrying about trying to cleanse existing data.
“You don’t just clean your data – the real question is why is your data not clean in the first place?” he muses. “You have to have a clean entry point for it. I don’t think I’ve ever spoken to a Fortune 500 CPO that said they had clean data. I think it’s because of the upstream processes in intake and orchestration. If all the cross-functional teams – the IT review, the legal review, the finance – are being manually shepherded by the procurement operations organisation, then how can you possibly end up with clean data?
“People are keying the same information into multiple systems, which might mean they answer in similar – but different – ways. So you end up with fragmentation on fragmentation. But if you have one single door to that data, you’ll be able to drive only clean data, because it’s a funnel. If you let everyone have different swim lanes that never intersect, you won’t have clean data.”
As 2025 approaches, Zip has multiple product capabilities and features coming up that Zaparde and his team are very excited about. This includes leveraging gen AI, something we’re seeing incredible utilisation of across the sector.
For Zaparde, attending events like DPW Amsterdam to talk about what Zip does and interact with peers and clients alike is a joyous part of his job. “DPW is really accelerating the rate of change in the procurement industry. That’s very much needed, and it’s energising to see so many incredible people from the procurement world in one place. I love spending time with these forward-thinking procurement leaders at this event.”
When we’re talking about technology in procurement, the importance of partnership is a major component for success. No business is…
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When we’re talking about technology in procurement, the importance of partnership is a major component for success. No business is an island, and joining forces with experts is, increasingly, the direction many move in for the sake of growth.
At DPW Amsterdam 2024, we met many businesses who were looking around at the procurement sector in search of either what direction to move in next, or who they can help. The event is one that brings people together to learn, to teach, to discover the cutting edge of procurement, and be inspired by it. So when we sat down with the CEO of Fairmarkit, Kevin Frechette, it wasn’t surprising that he brought Nick Wright, who leads bp’s Procurement Digital Garage, into the conversation.
For Frechette, one of the best things about working in the advanced procurement technology sphere is joining forces with other businesses to help them keep improving, and vice versa. “Having the chance to work with people like Nick, who are pushing the envelope when it comes to autonomous sourcing, is amazing,” he explains. “We’re fired up to be at DPW, absorbing this atmosphere.”
While it’s something of a running joke in the procurement world that most professionals in the sector don’t deliberately choose it, Wright actually did. “I went to university and thought ‘wow, I fancy a career in procurement or vendor management’. I know a lot of people don’t have that story, but I’ve been doing something I’m passionate about from the beginning. I love making deals, whether I’m buying a car, a house, or something for BP.” The Procurement Digital Garage he leads exists to look at problems being faced across procurement, and figuring out possible solutions.
For Frechette, the intention wasn’t to start a company in the procurement space, but his team quickly saw the opportunities within it. “We had this ‘aha’ moment,” he says. “It was a tough pivot. There was a lot of debate, a lot of late nights. I’m super glad we made it because we got to be in a space where people can be forgotten about, and we’re able to give them centre stage.”
The realistic approach to 10X
DPW itself exists to put procurement under the limelight. Each event is themed in a way that gets conversations flowing around the next big thing in procurement. For Amsterdam 2024, this theme was 10X – something Frechette believes isn’t achievable right off the bat.
“It’s something to strive towards,” he says. “It’s something where you work on getting a little better every single month, every quarter. You keep getting those small wins, and you build credibility. There’s no silver bullet. You just have to start the journey and learn as you go.”
For Wright, it’s about not getting caught up in the hype, but figuring out what’s realistic. “There’s a lot of hype out there, and the beauty of something like my team at the Procurement Digital Garage is to weed out that hype, because what’s right for us might not be right for someone else. Having a team that’s out there in the market, testing and figuring out what’s real, will put you in good stead.”
“There’s a leap of faith element that can be challenging to achieve, before you can really strive for 10X,” Frechette adds. “It’s like Amara’s Law: humans typically overestimate the value of technology in the short term, but underestimate it in the long term. So the hype is needed. We have to help people on that journey and sometimes, a leap of faith is needed. For the people that risk it, it’s exciting, and they’re then well positioned for the future.”
However, again, managing expectations is important. “People might be on the sidelines expecting a 10X solution,” says Wright. “But the reality is, you’re going to get 5% here, 10% – smaller pockets of improvement.”
The benefits of advanced technology are absolutely being seen at this stage, but being realistic about the future outcomes is important. “The benefits are there – not at the scale of 10X – but if you just make a start, you’ll achieve wins,” says Frechette. “You broadcast those wins across the organisation. That generates excitement, and then you can work on the next thing because you have ground swell.”
How ‘the future’ has changed
What’s interesting is that this 10X focus, this drive towards incremental wins, has reframed the way businesses plan for the road ahead. ‘The future’ used to mean having a three or five-year plan. Now, the future is only 12 months away.
“The thought process right now is ‘what can we do that’s super optimistic in just 12 months’?” says Frechette. “Then you can put in realistic time frames and set off on a sprint to get there. You have to be able to move fast. We have launches every two weeks now, and we have to be flexible with our roadmap along the way. But we always know where we’re going – we have a north star.”
“To me, that’s the only way to do it,” Wright adds. “I don’t have a crystal ball. Nobody knows what’s going to happen in two or three years. So what’s the point of creating a plan that’s going to get you to a certain point in those two or three years? You have to work on small iterations, make adjustments, change direction as necessary.”
It’s part of what makes Fairmarkit and BP an active partnership – the ability to be flexible and open up discussions at every point. It’s all about real-time feedback and trust-building, to the extent that both parties feel like they’re on the same team.
The right people in the right places
Because ultimately, it’s the human element that makes transformation happen. Having the right people in place is one of the elements that’s key to making sure implementing advanced tech for the sake of business strategy works at all. “It’s about access to talent and making sure you’ve got a capable user group that can make the most of that technology,” says Wright. “You don’t need to be a data scientist, but you do need to have the right mindset to take advantage of the tools you’ve got.”
“I agree – you have to get the right people on the bus,” adds Frechette. “You all have to be committed to going on the journey together. Prioritise where you start and where you’re going to have the most value with the lowest risk, and have people on your side who can give suggestions and ideas.”
While the much-discussed talent shortage can create challenges there, DPW as an entity proves that not only does procurement keep becoming more appealing and exciting, but where there are gaps, there are digital tools. “I’ve noticed a lot of folks under 30 who are here at DPW Amsterdam, and they’re genuinely interested in procurement,” says Wright. “We’re at a tipping point that makes me really excited about the profession I’m in.”
‘Digitalisation is just the beginning’ according to Crowdfox, a business which aims to improve procurement by bettering the ordering process…
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‘Digitalisation is just the beginning’ according to Crowdfox, a business which aims to improve procurement by bettering the ordering process while lowering costs. That tagline speaks to Crowdfox’s dedication to advancing procurement using the exciting tools the sector now has at its disposal, and this push to innovate is being driven, in part, by Martin Rademacher, Crowdfox’s CSO. We sat down with Rademacher at DPW Amsterdam 2024, the exciting vibe of the event spreading far and wide around us.
Rademacher is responsible for everything to do with Crowdfox’s customers. From sales, to marketing, to customer onboarding and success, and everything in between – that’s Rademacher’s wheelhouse. His background is in management consulting, with a focus on procurement and supply chain. So, while he started out in sales, he soon decided that procurement was the direction to move in.
“During my time as a consultant, I found procurement very interesting because it’s so versatile,” explains Rademacher. “Of course, it’s about the transactional phase with suppliers – but also you’re so connected with R&D, production, logistics, and so on. You have so many fields of application.”
10X thinking
At DPW Amsterdam, the overall theme of the two-day event was 10X. The concept of the 10X rule is around taking a goal you’ve set for yourself and multiplying it by 10. It’s an aspirational tool, coaxing all of us to aim higher. In procurement, that means innovating.
“In the last two years we’ve seen tools like ChatGPT trigger some big adaptations in the procurement world,” says Rademacher. “I think there is the opportunity now to achieve 10X in terms of efficiency gains. Especially when it comes to making better decisions, more quickly, in order to analyse data. We’re now finding out what AI can really do, and focusing on how that can help with strategy.”
For Rademacher, he believes people have the right tools to achieve 10X – it’s now about implementing those tools properly, and having the right culture.
“In the last couple of years, implementing tools has become much easier than it was a decade ago,” Rademacher continues. “They’re so well designed that they fit into large procurement systems, and can connect with other best-of-breed tools. I’d say implementation should be the focus, but it’s not that complicated anymore. AI tools especially are really intuitive. As a result, you don’t need much in the way of change management. People just intuitively cooperate with AI.”
The question of security
The big challenge, Rademacher believes, is data protection. When it comes to barriers preventing a 10X approach, concerns around data privacy are among the biggest issues. As a result, organisations have to take the necessary precautions before plunging into making major technological changes, or risk falling at the first hurdle.
“In the EU, it’s all about data protection,” says Rademacher. These concerns led to the Artificial Intelligence Act (AI Act) coming into force in the EU in August 2024. It was created in response to the rise in generative AI systems, and ensures that there’s a common regulatory framework for AI within the European Union. “Companies are very concerned about their data, but I wouldn’t call this an obstacle – more like a challenge.
“The key is making sure you have a protected environment. Start with a pilot in a limited space, for instance, and then make sure you can find a solution you can control in a safe environment that suits your operations.”
Shooting for the stars
With these measures in mind, it’s never been easier to implement new technologies and aim for that ambitious 10X goal. Certainly, advanced tools have never been more accessible, or more straightforward for businesses to educate themselves about. Even as recently as two years ago, integrating multiple elements of advanced tech – like genAI – wasn’t really possible.
“It definitely wasn’t easy to combine sources the way we can now,” says Rademacher. “Now, you can provide a much better user experience experience not only for procurement professionals, but for anyone who takes advantage of what procurement introduces to the company. Finding the supply to fulfil your demand is so much easier now. You no longer have to have difficult conversations starting with an email to your procurement professional to identify whether you’re allowed to purchase from a certain vendor, and whether they’re vetted or not. Streamlining processes like that makes that information quick and easy to identify.”
Additionally, we’re at a point with advanced technology where the tools we have access to are capable of handling more and more volumes of data at an extremely fast pace. “In consulting, for example, every project started with an analysis of the status quo of a firm,” says Rademacher. “We’d figure out who the vendors are, the categories, and the spend. Depending on the workforce, this could take one or two weeks. Now, with the tools we have access to, you can gather this information in 24 hours.”
The evolution continues
While we’re seeing many of the benefits that come with genAI and other advanced technologies already, it’s only the beginning of what we can achieve using these tools. GenAI is at a peak right now, but according to Rademacher, it might take another five years to achieve its full productivity level. “There’s also this ambitious idea going around of fully autonomous procurement, and it’ll likely take a good 10 years to reach that level of productivity,” he adds. “On the other hand, nobody is talking about robotic process automation anymore because we’re almost there with that already.”
Another challenge is data quality. The cleanliness of an organisation’s data can make or break its use of advanced technology, which is where making the right connections with service providers comes in. “It’s a good example of when to find the right partner,” says Rademacher. “Find someone from the innovative tech space who you think you can rely on. Don’t try to do it all on your own – that’ll just hold you back more and more. Be bold; find the right partner to make the most of your data and that helps you constantly improve. There’s a lot of talent out there, a lot of solutions that are really helpful for organisations of all sizes. You’ll improve step by step.”
There’s no doubt that it’s an exciting time for procurement. The atmosphere at DPW Amsterdam 2024 was electric for that exact reason. The event, in Rademacher’s words, has “a really strong influence on the sector and enables attendees to learn about how the landscape is developing in real time”.
“The AI-driven future is already a reality for us,” he states. “We’re beyond the pilot phase with our AI tool, ChatCFX, and now we really want to drive market share. 2024 going into 2025 sees us in a good position with high user visibility, and now we’re adding ChatCFX to the game, pushing it into the European market. We’re at DPW Amsterdam to meet the players who are looking for a solution exactly like ours, making it an invaluable place to be.”
The buzz of DPW Amsterdam draws in the most innovative minds across the industry. They’re there to have riveting conversations…
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The buzz of DPW Amsterdam draws in the most innovative minds across the industry. They’re there to have riveting conversations with their peers, to inspire, to teach and learn in kind. And they’re there to keep an eye on an industry that doesn’t stop changing for the better.
This is a big part of the appeal for Fraser Woodhouse. Woodhouse leads the digital procurement team within Deloitte in the UK. His team historically focused on large-scale transformations, providing a backbone for suite implementation. Increasingly, however, it’s turning its attention to helping clients navigate a plethora of technology solutions. The goal is to help them build and scale, and take advantage of some of the more niche functionalities available. These are things that can be highly daunting for many customers, which is why Deloitte is there for support.
“We’re helping clients ask the big questions,” Woodhouse explains as he sits down with us at DPW Amsterdam 2024. “How do you connect the technology in a way that allows data to flow from one system to another? How do you deal with processes that are connected to solutions which all have their own release cycles? How do you approach change management? That underpins so much of where the value is going to be achieved, and a lot of the providers will be focusing on it. They just might not have the same capability that Deloitte can provide.”
For Woodhouse, getting involved with procurement was a total accident. He even left the sector at one point, but his strong foundational knowledge – and the exciting landscape procurement is enjoying right now – lured him back in. “It changes faster than I can get bored with it, that’s for sure,” he explains. “Procurement is fascinating.”
Aspiring to greatness
Especially now, with constant conversations around genAI, 10X, and beyond. Procurement is only becoming more interesting, more enticing, drawing young professionals in to fill gaps in the talent pool. 10X was actually the theme of DPW Amsterdam this year, a notion that’s on everyone’s lips. And for Woodhouse, it’s absolutely something to aspire to.
“Aiming for 10X is sensible. You just have to consider your timescale. I’d caution against running before you can walk, but a culture of experimentation is important. Running small-scale pilots can help you hone in on where you really want to see value, or where value is likely to be generated. Starting with requirements is a fundamental thing at the moment, but you shouldn’t underestimate how long that will take. And it’s a continuous consideration, because requirements change. Just keep trying to refine your solution in order to take advantage of everything that’s out there right now.”
Fotograaf: MichielTon.com
Having the wrong mindset is one of the major barriers to adopting 10X thinking. It all starts with the company’s culture, and whether that’s one of growth or not. “I imagine most of the people here at DPW Amsterdam have already made that mental shift,” says Woodhouse. “Last year, people were still trying to understand how they, as big companies, could utilise startups. That’s changed now, and it’s amazing to see companies that were startups three years ago working with all these big enterprise customers.
“They have scaled and grown in partnership with those customers. Mindset is so important, and having the wrong one will only create barriers and missed opportunities.”
Always improving, never slowing down
When it comes to the advantages that technology has brought to procurement in the last few years, the list is endless. Procurement has gone from an overlooked segment of any given organisation, to having a seat at the table and helping make major business decisions. 10X thinking – whether it goes by that name or not – has been spreading across the segment and fuelling businesses to aim higher.
“The layers of automation have really improved,” says Woodhouse. “A year or so back, there were a handful of use cases that you could truly automate, but now you can do it at a much larger scale. Another big change is around security concerns. There are more tried and tested case studies to draw upon now, and solutions are more readily available. You don’t necessarily have to be a pioneer, because someone else has already taken that first step.”
The question of data
Something else that holds businesses back, despite the innovation at their disposal, is an element that can be harder to change: poor quality data. When trying to implement advanced technology solutions, bad data can make or break their success.
“It’s always useful to focus on that and have a dedicated work stream,” Woodhouse advises. “You need someone who really understands data. I think there’s a tendency to try to boil the ocean before you even get going in your transformation, which isn’t necessarily a bad thing. Cleaning up your data before you start, and having a fresh foundation will help you make decisions on what to implement on top of that good data.
“Doing all of that is obviously hugely beneficial, but it’s going to slow you down, in many cases. There are ways around that, like embedding the cleanup of data within the new processes. Data is important – we shouldn’t underestimate that – but there are different approaches to solving the issue of poor quality data, like buying it or using genAI to restructure your data into something more powerful. Either way, you need a strategy.”
Novel thinking 101
Some businesses fall into the trap of thinking that they can’t achieve specific things because their data isn’t in the right position, but novel thinking around data can allow them to still drive forward. “You’ve just got to focus on it. You can’t assume the data’s going to fix itself,” Woodhouse adds.
Novel thinking is certainly something that can be seen at DPW events, and DPW Amsterdam 2024 was no exception. People congregated there to learn, to share stories, to inspire. For Woodhouse, the magic of the digital procurement sector right now is that everybody recognises that their journey has no end. While that may be daunting, it’s a positive thing and keeps procurement professionals striving for more.
“It’s a continuous improvement journey, and I think the best-performing organisations will recognise that, and invest in the business capability to continue that journey,” Woodhouse concludes. “That’s how you get proper value. I love hearing about how people frame problems differently, and how they approach the solutions.”
Making procurement slicker, more streamlined, is the name of the game right now – and this is precisely why Globality…
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Making procurement slicker, more streamlined, is the name of the game right now – and this is precisely why Globality exists. It’s an organisation which leverages advanced, native-built AI to make sourcing more autonomous for Fortune 500 and Global 2000 companies, meaning it has a finger on a pulse of the technology tools procurement now has access to as the industry shifts and evolves.
Keith Hausmann is the Chief Customer Officer at Globality. He has been working in procurement since the early 90s, both in industry as a service provider, and now, at a technology company. He came to Globality from Accenture, where he ran the operations business. During his first real job after college, Hausmann was also part of a training program at a major Fortune 500 company, working closely with a COO. At some point they got into a conversation about salespeople seemingly having an advantage over procurement people due to their access to information, knowledge, and training. The COO suggested that they launch a company to help support procurement. For Hausmann, it was a serendipitous entry to the industry.
“I came to Globality because I saw the business was struggling with how to scale, automate, and deliver a differentiated user experience. Ultimately, I found it really compelling, and joined about five years ago.”
Achieving 10X thinking
Hausmann admits that the concept of what procurement is has only been defined relatively recently, and he’s been in the industry long enough to have seen the shift happen and suddenly accelerate over the last few years. Now, procurement professionals are in a position where they’re able to think big, and they have the tools to support that way of thinking. One of the most-discussed topics right now is 10X, whereby businesses are setting targets for themselves that are 10 times greater than what they can realistically achieve.
“There continues to be, and always has been, so many mind-numbing manual activities that go on in procurement spaces,” says Hausmann. “We’ve built small armies of teams to handle those things. I think 10X has prompted us to take a step back and ask if there’s now technology that can uplift the role of people in the function and take on some of those automatable tasks. Whether that’s writing RFPs, discovering suppliers, or analysing proposals – these are all things that can be automated in today’s technological world. With 10X thinking, you can imagine the many, many, many things that can be automated and just go after them.
“There are barriers, of course. The biggest one is not being able to convey a compelling vision of what we want people to do in the new world. It’s not necessarily about making them go away – it’s about making their daily jobs, lives, and work more valuable. There are so many things around category thinking and strategy that don’t get done because people are spending so much time on tasks that could be automated. So I think the barrier is creating that vision and that plan to shift the operating models, roles, and the skill sets to something new and different.”
People power
Hausmann believes that if roles are reshaped and honed in response to automation, it’s less likely that there will be resistance to change because employees will know exactly what they’re doing, rather than being concerned about their future. “They have to know what they’re doing before they jump on board. It just requires a mindset change and good change management.”
Hausmann believes it’s down to the CPO to drive that change management by conveying the activities, impacts, roles, and operating model they envision. If they can paint a picture of how humans can impact things in a new way, alongside the new technology rather than against it, suddenly it’s an exciting prospect and people are keen to make a bigger impact.
CFOs and CPOs joining forces
While CPOs now have a long-deserved seat at the table to help push change business-wide, CFOs’ roles are also expanding and having an increased impact on procurement. “I think they’ve always influenced what’s going on in procurement,” says Hausmann. “CFOs are the champions of many things, but certainly improving the bottom line of the company. They’re also champions of using technology to make the organisation more resilient, more scalable, and more efficient. There was a time when people thought that the CTO or CIO would be doing that, but more often than not, the CFO is the ultimate owner of improving business impacts. More and more, we’re seeing our customers leaning on the CFO to help them make decisions about investments that have a big impact through technology and AI.
“These days, the relationship between the CFO and CPO is wildly different to what it once was, and CFOs are showing more interest in procurement as a function than ever, making a difference to the bottom line. It makes sense because, in theory, procurement controls one of the biggest cost line items in a company, besides raw headcount.”
Matching the pace of technology
The fact that we still need to focus on change management and relationships confirms that the way procurement is changing isn’t just about the technology. Far from it. However, technology is moving at an incredible pace and needs to be taken seriously. There are things that are possible now which couldn’t be done even one or two years ago.
“A few years ago, technology couldn’t write an RFX document for you,” Hausmann says. “Technology could not instantaneously bring to light the most relevant suppliers from within a customer’s supply base, or in the broader market. It couldn’t write a contract, or an SOW, or a work order. It can now. Those are things that are near and dear to my heart that were impossible 3-5 years ago.”
With these tools in mind, procurement professionals are able to think about the future in short-term stints. Five-year plans are no longer good enough when it comes to the way procurement is shifting – a year is now the maximum for putting plans in place.
“I’ve always thought that procurement, from the perspective of technological advancement and investment perspective, should sit under a broader business umbrella,” says Hausmann. “I’d guess that probably 50% of companies in the world right now have some kind of program in place to save money or improve agility by investing in technology. And speed to market is more important than ever, so sourcing can’t be a bottleneck.”
Looking ahead, Hausmann expects to see many of the unique, differentiated technology providers becoming interoperable together, because big enterprises want services that operate and scale well in combination with others.
“We’re seeing that a lot, and working with our customers on how we improve interoperability and integration,” he says. “Tools will become more seamless, more easy-to-use, more scalable. Another big thing is, and will continue to be, analytics. It’s a hot topic in procurement, and I think there are profound opportunities to be deployed. For Globality, we’ll continue to endlessly innovate on user experience, ease of use, and beyond.”
“I’m overwhelmed,” are Matthias Gutzmann’s first words when asked about DPW Amsterdam 2024. At the end of the bustling two-day…
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“I’m overwhelmed,” are Matthias Gutzmann’s first words when asked about DPW Amsterdam 2024. At the end of the bustling two-day event, we sat down with Gutzmann, the company’s founder, and Herman Knevel, DPW’s CEO, for a debrief. Gutzmann also quite rightly pointed out that the final word on summarising those 48 hours is in the hands of the sponsors and attendees, but if the countless conversations we had with said sponsors and attendees are anything to go by, it was the best DPW event yet. And Gutzmann and Knevel agree.
“I really think that’s the case,” says Gutzmann. “We almost doubled the number of exhibiting startups, we had over 120 sponsors, more startup pitches than ever, and all the feedback I’ve heard so far has been amazing. There are always things you can do better, but I’m absolutely happy.”
Across the 9th and 10th of October, DPW Amsterdam welcomed over 1,300 attendees through its doors at Beurs van Berlage, Amsterdam. Those attendees arrived from 44 countries across 32 industries, and the event itself featured 72 sessions with 140 speakers across five stages. It’s abundantly clear that people are deeply passionate about DPW.
“On day one, it was already packed at 8:30 in the morning,” Knevel states. “The energy in the room was contagious, and the numbers speak for themselves. The startups, the innovators, the corporates, the mid-market – everybody who’s here has a genuine interest in what these guys are bringing to the procurement space.”
Reconnecting with the vision
Gutzmann describes that intangible energy as “bringing a little bit of joy back to procurement”. For many years, procurement was a very ill-defined concept – almost as ill-defined as the role of CPO. The shift has been a quick one, accelerated further by the COVID-19 pandemic, and events like DPW Amsterdam are part of the reason why. CPOs having somewhere to go, to meet, to learn about the procurement landscape is vital, hence that inspiring energy that permeates every DPW event.
“A lot of people are missing that vibe,” Gutzmann continues. “It’s why I founded DPW. I was inspired by Mark Perera [Chairman of DPW], who I worked with at Vizibl, and had great technology while also being so inspiring. I realised we needed to connect founders with CPOs. I think every CPO should talk to one startup founder per week, at least. It’s important that we listen to their vision.”
Striving for 10X
The core of those visions for the 2024 event revolves around the concept of 10X, the idea being that you set targets for your business that are 10 times greater than what you think you can realistically achieve. It keeps people ambitious, always striving for greatness, and it’s especially prevalent in startup culture – hence Gutzmann’s belief that CPOs should be connecting with them more.
“Deciding on 10X for this year’s theme was serendipity,” says Knevel. “The term came along and Matthias said, ‘this is it – this is what we need in procurement’. This is what the industry needs, and we’re exploring it, diving deeper.”
“Last year’s theme was ‘Make Tech Work’, which was all about getting the basics right in order to scale,” Gutzmann continues. “This year we said, ‘how can we take it further?’ We are entering the biggest wave of AI yet. That technology is giving us the opportunity and the possibility to scale outcomes. The world around us is changing so fast, so we need to be more agile, scalable, and faster in procurement. It’s a very ambitious, maybe lofty theme, but it’s a mindset more than anything else.”
“It’s the mindset that drives innovation and speed,” Knevel adds. “That’s really important in this age of procuretech and supply chain tech.”
When it comes to honing that 10X mindset, it’s all about having a purpose in mind. A lot of the procurement professionals we spoke to at DPW Amsterdam called this a ‘north star’, which is the phase Gutzmann uses too. “That’s where it starts. There’s so much procurement can do. There are so many problems in the world, and I believe procurement can be the solution to many of those. So I think it starts with the CPO and their leadership, their vision. You also have to embrace startup innovation, be more experimental in the way you work, instigate new ways of working, and be bold in your thinking. You also have to remember it’s okay to fail.”
Growing DPW
Something that’s particularly impressive about DPW Amsterdam 2024 is that it’s actually the second of the year. Back in June, DPW ventured into the North American market with an intimate summit held in New York City, which CPOstrategy was fortunate enough to be invited to. Planning one wildly popular event a year is one thing, but venturing into a whole new part of the world with an additional one is incredibly dedicated.
“I’m a bit more conservative when planning ahead, so there probably wouldn’t be a New York event without Herman encouraging me,” says Gutzmann. “I’m glad he said ‘let’s go for it’. It was a short-term plan, but it was ultimately very successful and the right decision.”
Knevel adds: “The feedback we got from sponsors and delegates was quite impressive. They were asking for more. And it’s not just Matthias and myself – we have a great team here. This is a massive production, but we made the jump and it’s paid off.”
Inspiration for 2025
When it comes to the lessons Gutzmann and Knevel have learned in response to this event, it’s more about narrowing down the influx of ideas DPW gives them. By the time we spoke with them at the end of the Amsterdam 2024 event, their heads were spinning with inspiration.
“I have so many ideas,” says Gutzmann. “Every year we reinvent the show, so we never rest. We’re always asking what we can do better. How can we improve? I think this year we maxed out the number of sponsor stands that are possible to have. We doubled the number of under-30 attendees. There’s the potential to go a little deeper on the talent side, connecting students with the corporates and building a proper program around that.”
There was also the Tech Safari this year. The idea was to make the expo hall easier to navigate, since it was more crowded than ever this year. Members of the DPW team acted as ‘super connectors’ to help attendees find the right solutions and help startups find new customers. The aim was to simply make it easier for everyone involved to find what they’re looking for in small groups,enabling them to find who they wanted, talk to them, and ask questions. It turned out to be an amazing interactive experience for people, making sure they felt thoroughly looked after and valued.
“Plus there’s an opportunity to cater more to the corporates coming in,” Gutzmann continues. “Perhaps we will build a custom program for them around the event. Some of them are already coming in with teams and doing annual leadership meetings outside of the venue, but I think there’s scope to show them solutions and do some workshops within the event. We can also do more with day zero, where we have site events. There’s much more we can do.”
Giving CPOs what they want
As for the broader future of the event, DPW’s heart lies in Amsterdam and will continue to do so. The organisation is building its team even further and putting strategies in place for future events, allowing it to move forward. “We follow the demand of what our customers want,” Knevel says. That’s what really drives DPW and how the event is themed and set up. The organisation listens to CPOs so it can give them exactly what they need, and what will help the industry level up further and further.
“There are things we’re still developing,” says Gutzmann. “For example, the podcast studio [something introduced in its current form for 2024] is something Herman is very passionate about, so it was great to test it out here. There’s more we can do with that. We have so many ideas and it’s important to engage our amazing team on these ideas and see what they think along the way.”
“We’re ideating a lot,” Knevel adds. “And we’re asking our ecosystem what we should do more of.”
“Ultimately, we’re bringing in the voice of the customer to make sure we’re giving them what they want and need,” Gutzmann concludes. “That’s the whole purpose of DPW.”
This is a very special edition, thanks to DPW/2024! It is safe to say the world’s biggest and most…
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This is a very special edition, thanks to DPW/2024!
It is safe to say the world’s biggest and most influential tech event in procurement and supply chain lived up to its billing last month. Boasting over 1,300 attendees from 44 countries across 32 industries and 72 sessions featuring 140 speakers across five stages alongside 120 sponsors, 84 startup pitches over 14 tech domains, the numbers speak for themselves. Procurement gets excited about DPW. And we’re excited to bring you an exclusive DPW takeover edition of CPOstrategy, where we bring you all the excitement, fresh from Amsterdam!
Every year, DPW selects a different theme to set the tone for the conference’s conversation. This year, 10X was chosen: the idea that organisations should aim for a moonshot mindset instead of seeking incremental growth. In procurement and supply chain, 10X thinking essentially means fostering a progressive diverse culture where calculated risks are embraced, reimagining and rewiring traditional processes. Thus moving from legacy tech to disruptive technologies, and leveraging AI and automations that deliver tenfold improvements in efficiency, cost savings, and supplier relationships. Inside this bumper issue are over 100 pages dedicated to this unique event and the people who make it so special.
Consumers today are more environmentally conscious than ever, making sustainable procurement essential for businesses aiming to thrive. By integrating Corporate…
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Consumers today are more environmentally conscious than ever, making sustainable procurement essential for businesses aiming to thrive. By integrating Corporate Social Responsibility (CSR) principles into procurement processes, organisations can go beyond traditional criteria like price and quality to include environmental and social factors, supporting their sustainable development goals. Writes Adam Spurdle, COO at Communisis Brand Deployment.
Unilever’s Sustainable Living Plan is a prime example of this. Launched in 2010, this initiative aimed to align profit with purpose by decoupling business growth from environmental harm while enhancing social impact. With ambitious goals like sourcing 100% of its agricultural raw materials sustainably, Unilever shows us that sustainable procurement can create real value—not just for the company, but for all stakeholders.
Consumers are cutting businesses no slack when it comes to sustainability, and so procurement has to meet high environmental, social and ethical standards. It’s only by taking consumer demands seriously that companies will start to significantly reduce their environmental footprint, promote fair labour practices, and improve their reputation.
However, it’s not only about reputation and ethics. A sustainable approach to the supply chain also helps to mitigate risks associated with supply chain disruptions and regulatory compliance while also leading to cost savings through improved efficiency and waste reduction.
As resources become scarcer and consumer expectations evolve, sustainable procurement ensures that businesses remain resilient and competitive, ultimately contributing to a more sustainable future for all.
Despite its benefits, unfortunately sustainable procurement does come with some challenges.
Initial Costs
Sustainability often comes with an initial price tag that can be daunting for businesses. The higher cost of sustainable materials may deter companies focused on cost-containment, keeping consumption of sustainable products low.
However, as sustainability becomes the norm, increased competitiveness within supply chains will likely drive prices down. By starting their sustainability journey now, businesses can position themselves for greater savings and environmental value over time, ultimately balancing those initial expenses with long-term financial and ecological benefits.
Supply Chain Complexity
Navigating diverse regulations across countries poses a significant challenge for businesses. Different regions have varying sustainability requirements, making compliance complex, especially in less mature markets where partners may not yet recognise the value of sustainable practices.
To overcome this, organisations must stay informed about regulatory changes and actively engage with stakeholders to promote sustainable sourcing and practices, ensuring consistency across their supply chains.
Data Visibility
A lack of standardised metrics for measuring sustainability can complicate efforts to track and compare environmental and social impacts. Inconsistent tracking methods and varying approaches to sustainability can lead to confusion and conflicting results for the same product. This challenge is amplified when sourcing for multiple clients.
To improve data visibility, businesses should adopt unified standards for traceability and carbon output, leveraging technology to streamline data collection and reporting across their supply chains.
Culture and Incentives
Establishing the right organisational culture is essential for driving meaningful change in procurement. Currently, many procurement functions prioritise cost savings over sustainability gains, creating a capital-focused culture rather than one centred on carbon reduction.
To create a culture that prioritises sustainability, businesses need to align incentives with environmental objectives, scrutinising purchasing volumes and actively working to reduce their carbon footprint.
Lack of Visibility
Inconsistent data flows and limited collaboration among stakeholders can cloud transparency in supply chains. When systems are not cooperating and data anomalies arise, tracking goods and operations becomes particularly challenging. Siloed operational units and a reluctance to share information further complicate matters.
To improve visibility, organisations should encourage collaboration and open communication across departments, breaking down silos to achieve a clearer understanding of their entire supply chain.
Getting technical
Technology, including AI, is starting to be more widely used to improve chain visibility. By incorporating AI into their analytics processes, organisations can analyse large amounts of data, uncovering patterns and insights that lead to better-informed decisions.
Integrate AI with IoT and cloud computing allows for continuous monitoring of supply chains in real time. So, rather than being reactive to issues, AI can help businesses anticipate potential disruptions, including downtime, and optimise their operations in light of that. Some AI platforms even provide recommendations on how to mitigate these disruptions and improve workflows, including exploring alternative suppliers, managing production schedules, and improving logistical routes.
City and County of Denver: Collaboration at the Heart
Denver is one of the United States’ most spectacular cities. As the largest city in Colorado, it is located at the base of the Colorado Rocky Mountains and is home to picturesque views and warm weather for a good part of the year.
Lance Jay heads up procurement at the City and County of Denver. According to Jay, his procurement function touches most entities within the municipality which leaves little time for boredom. “From arts and venues to parks and recreation to Denver International Airport and street maintenance and everything in between, the role is certainly varied,” he explains. “We’re buying everything from airplane de-icer to road paint to golf course fertiliser; no one day is the same for us. We are constantly dealing with something new and we’re buying everything and anything.”
Scaling efficiency
It is fair to say procurement has been given a tough hand in recent times. Ultimately, standing still hasn’t been an option. The past few years have been dominated by external problems such as COVID-19, wars and inflation among other black swan events. It has meant that the importance of having a finger on the pulse of the latest problems is key to long-term success, something Jay is well aware of.
“Part of our mission and vision is being agile and efficient,” explains Jay. “And if you look at the last four or five years, things like working from home and having virtual meetings, really didn’t exist before. For us, it was going from in-person bid openings to doing virtual bid openings which was challenging at first. In the past 12 to 14 months, the use of AI has also increased and is being incorporated into a lot of different things.
“We have many vendors now using AI to submit their bids. We need to look at the bids and see if they were AI-generated versus the vendor doing the work. So, a lot of those old school procurement things are still valid, but we have to pivot a little bit and shift how we do things to be either more technology savvy with AI or be able to incorporate it into the business. Because things are now moving at such a fast pace, if you aren’t agile, you’re going to get left behind.”
For Jay, he values being open to alternative ways of working and not keeping operations the same because that is what is safe. He explains that within the City and County of Denver, the organisation is continuously searching for new ways to harness efficiency.
Change is the only constant, and the changes affecting the global procurement industry seem as though they are, indeed, constant.
The shockwaves thrown out by the COVID-19 pandemic are fading, but not gone; in their wake, geopolitical tensions, environmental instability, and rapidly advancing technologies are reshaping the ways in which we source and secure the goods and services upon which modern organisations rely. From consumer expectations to cybersecurity threats and a trending shift from globalised supply chains towards nearshoring and resilience-driven sourcing, procurement in 2024 would be almost unrecognisable to someone working in the industry just a few years ago.
There are many ways to meet new challenges and changing circumstances, however.
Jayna Bundy, the new head of Microsoft’s indirect procurement business unit, stresses the value of bringing “a broader finance perspective” to the role. Bundy moved into procurement from Microsoft’s treasury department, where she has worked for almost two decades. “My finance background has allowed me to help connect the dots between our supplier strategies and the broader financial goals of the company,” she explains. “The skill sets I developed in treasury, such as managing cash flow, cost efficiency, technology and innovation, business relationships, and risk management, translated well into the procurement space. My passion for innovation and technology, which I honed in treasury, also aligns well with the current focus on digitising procurement, especially in light of the rise of GenAI.”
A year after taking on her role, I sat down to speak with Bundy about bringing a new perspective to procurement, cultivating agility, nurturing innovation, and harnessing the potential of Generative Artificial Intelligence (GenAI).
Moving to procurement
Bundy stepped into her current role in May of 2023, where she is responsible for overseeing indirect procurement at Microsoft.
She and her team support Microsoft’s businesses with engagement and sourcing for a variety of categories including professional services, technical services, marketing, among others. They also manage business process outsourcing for enterprise programs, including a centralised employee device program, which ensures cost efficiency in device purchasing across Microsoft’s 220,000+ employees.
Additionally, Bundy’s team handles supplier relationship management, responsible procurement and compliance, focusing on supplier security, sustainability, privacy, risk management, and diversity. “We also have a Center of Excellence that oversees source-to-pay technology, innovation, and procurement-related mergers and acquisitions, such as onboarding Activision Blizzard after Microsoft finished the acquisition in October of last year,” she adds.
Stepping into a procurement role was a noteworthy change of direction for Bundy. “I’ve been at Microsoft for 19 years as of April, and for 18 of those years I was in treasury,” she says.
Pan Pacific Hotels Group’s Alice Kwek on procurement in the hospitality industry, the importance of building a strategic function, and why continuous learning, training and curiosity have been instrumental to her success…
If you want to know what a consummate career in procurement and supply chain looks like, you could do worse than look at Alice Kwek’s CV. In more than 20 years in the industry, Alice has amassed the kind of skills, expertise, and experience that few can match, working her way from a first buyer role through successive positions in the marine, offshore, and oil and gas industries, before taking a series of more senior leadership roles in hospitality and travel. In 2023, she brought the breadth and depth of this experience to luxury hotel company, Pan Pacific Hotels Group. And all this, she says, having first stumbled into the profession unexpectedly.
“I was first given the opportunity to learn about procurement when I was working at a marine offshore company,” Alice says, reflecting on an impressive career, “I rapidly developed a passion for the industry that has lasted. My first role was as a buyer, responsible for handling purchases, negotiations, and supplier relationships – it was a level of hands-on experience that gave me real, practical insights into the operational aspects of the profession and reinforced my interest in procurement.”
We were granted access to the group procurement team at Bosch to produce an incredible insight into purchasing and supply chain at the global provider of technology and services…
Bosch purchasing powering pack: Teaming up governance, procurement & service
As with any large and successful enterprise, procurement and supply chain play a vital role in the competitiveness of Bosch, whilst also aiding the company’s efforts towards a sustainable future. The company generated sales of €90bn in 2023 and its purchasing volume exceeded 50% of turnover. Keeping the purchasing and supply chain function competitive, agile, and sustainable is a huge undertaking. A mission that requires both strategic independent agility and a collaborative, community-minded culture that can draw upon its vast network of insights.
The person overseeing the procurement functions across Bosch’s four business divisions is Thomas Schulte, Head of Governance, Supply Chain Management Purchasing. Like many of his colleagues, he was attracted by the idea that he and Bosch could change the way that people live, in a meaningful and compassionate manner. “In purchasing, you have this opportunity to meet people, to create things and to make a change,” he enthuses. “And this is something I find extremely inspiring.”
Amazon Business: Why CPOs need a seat at the C-suite table
Stephanie Lang, Director and General Manager for Amazon Business, highlights the significance of the CPO role and provides actionable takeaways for businesses looking to leverage their product leadership effectively
The role of the Chief Procurement Officer is in the midst of seismic transformation and change.
No longer a back-office role hidden in the background, today’s CPO has risen to become one of the most important components of a company’s operations. Out of sight no longer.
Witnessing the evolution first hand is Stephanie Lang, Director and General Manager for Amazon Business. Lang speaks exclusively to CPOstrategy and shares her extensive experience and expertise, shedding light on why CPOs are integral to an organisation’s strategic and operational success. The discussion covers various facets of a CPO’s responsibilities, including driving product innovation, aligning strategies with business goals, and fostering cross-functional collaboration.
Lang also explores how CPOs serve as the bridge between market needs and company capabilities, thus playing a crucial role in sustaining competitive advantage.
Alexander Pilsl, Director of Procurement at TeamViewer, talks AI, agility, and driving procurement transformation with a unique approach to leveraging the partner ecosystem…
The world is changing. New challenges, from geopolitical instability to rising fuel costs to the worsening climate crisis, are conspiring to create what a recent procurement industry report referred to as “an environment of permanent crisis”. Old value chains are no longer stable or profitable in the ways they used to be, and organisations are fighting to find new methods of tackling this new era defined by disruption.
In the face of this new reality, savvy companies are looking for new ways to position procurement within their organisational structures. And not only avoid the challenges posed by the modern procurement landscape, but leverage new strategies and technology to unlock value for the business. In turn, a new breed of more agile, more collaborative procurement functions is emerging, focused on leveraging technology and their partner ecosystems in equal measure.
Modern procurement
“I think TeamViewer was exceptionally smart to recognise that the world, and therefore the expectations placed on procurement as a function, has changed,” says Alexander Pilsl, Director of Procurement at TeamViewer. Pilsl joined TeamViewer in November of 2023 with a mandate to create a modern, value-driven procurement function delivering on both the traditional goal of cost containment, but also in the ESG and risk management spaces, all the while maintaining the function’s exemplary record on compliance.
“When I arrived at TeamViewer, I found a solid procurement process built around a theme of compliance,” Pilsl recalls. TeamViewer went public in 2019, and put a lot of strategic emphasis on meeting the regulatory and compliance requirements that accompany that transition. “I arrived and found a PO compliance rate north of 95%,” says Pilsl. “That’s just incredible. I’ve never seen anything like that. The mandate, then, was to modernise to meet the new challenges posed by the procurement sector, and deliver new value without losing that level of compliance.”
Creactives: Artificial intelligence with a human touch
Adriano Garibotto, Co-founder and Chief Sales & Marketing Officer at Creactives SpA, discusses the generation of enormous benefits for CPOs and supply chain chiefs through a unique brand of AI…
Artificial intelligence has opened an ever-expanding universe of possibilities and opportunities as it continues its breathless acceleration. The genie is well and truly out of the lamp, and we must all find the most positive uses of its power. None more so than in procurement and supply chain where AI is reconfiguring the functions at every level.
Adriano Garibotto is Co-founder and Chief Sales & Marketing Officer at Creactives SpA, which creates and deploys AI solutions for procurement and supply chain digitisation. He has joined us for a discussion on just how Creactives and its unique AI tools are generating enormous benefits for CPOs and supply chain chiefs, covering spend analytics, master data governance, and procurement guidance automation.
As well as being responsible for sales and marketing at Creactives -headquartered in Verona, Italy and with offices in Spain, Germany, and France, Garibotto is also a member of the company’s board, along with fellow Co-founders Paolo Gamberoni and Francesco Bellomi, CEO and CTO respectively. Garibotto takes us back to the beginning. The very beginning.
The very beginning
According to many historians, there were three inscriptions written upon the ancient Greek Temple of Apollo at Delphi, one of which resonates with Garibotto: ‘Know thyself’. “4,000 years ago, the Greeks said everything that is needed,” he explains from his Verona office. “And we are still there. To know yourself in procurement implies answers to four questions. What I buy? From whom I buy? When and how? These are the questions you need to be able to answer if you want to set your benchmark, if you want to set your starting point, if you want to be able to answer who you are, OK? Who you could be will depend on the negotiation and other things. But what you are today is something that comes up from the analysis of the data, which is the point where everything starts.”
We caught up with Shachi Rai Gupta from ORO Labs to discuss the importance of orchestration in procurement.
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Simplifying procurement in smart ways is the ultimate goal for ORO Labs. Utilising the best of AI, ORO Labs aims to implement procurement orchestration across sectors, creating an experience that is simultaneously automated, augmented, and humanised.
Shachi Rai Gupta is VP Strategy at ORO Labs, with a wealth of transformation and technology experience behind her. Rai Gupta’s sharp eye on procurement has allowed her to witness the rise and fall of various trends, and understand what the sector needs as it – along with technology – evolves.
We caught up with Rai Gupta at the DPW NYC Summit back in June, a special North American version of the event. Procurement trends, especially AI and orchestration, were very much the theme of the day, prompting lively conversations amongst some of the world’s most influential procurement leaders.
Procurement as a net positive experience generator
For Rai Gupta, the trends right now are guided by the fact that procurement has more of a strategic and evolved role than ever, giving the function the opportunity to have a great impact on the enterprise bottom-line and the environment and community at large
“Procurement is morphing into a function where one of its biggest responsibilities is to be a net positive experience generator,” she explains.
“Procurement really is a service function for the whole business stakeholders. We, as procurement professionals, need to see things through the lens of the business. This includes what issues the business is trying to solve, and meeting the business where it’s at for good collaboration.
“It’s also important to make this experience as easy as possible, rather than cumbersome and time intensive. That needs to be catered and customised to the individual business segments.”
Prioritising the planet
Another area Rai Gupta is seeing talked about a lot is sustainability. This topic has, for some, been sidelined a little in favour of advanced technology. But it’s just as important as it’s always been, and it’s vital to keep the discussion alive – especially in procurement.
“More and more, companies are realising the impact they’re having on the environment,” Rai Gupta explains. “It’s an increasing priority on all our agendas. The technology is still nascent in that space, in the sense that there aren’t good ways to do benchmarking or tracking. That’s going to be an interesting space to watch out for.”
The next generation
Another hot topic of the DPW NYC Summit was the talent shortage. We at CPOstrategy discuss this topic a lot with procurement professionals, and there’s no one answer for fixing the issue.
“There’s a dearth of good digital talent,” Rai Gupta states. “The skillset you need today in procurement is very different from what we’ve had before. To be able to leverage that, to really make use of the procurement teams you have and the operational model you want, it’s a different challenge. The structure of your team is more important than ever.
“While that shortage is there, when you do have the right people in place in procurement, that’s where the department shines,” Rai Gupta adds. “That’s where procurement becomes a group of trusted advisors for the business, providing proactive opportunities. We wear a lot of hats in procurement, and we’re stepping up to a new level of evolution.”
Advanced tech for good
And, of course, AI and orchestration are terms on everyone’s lips right now – procurement included. AI is, in Rai Gupta’s words, “a solver”. Many of the blockages and challenges procurement is experiencing as it evolves can be solved, or at least aided, by AI and orchestration. “There’s so much tech out there,” Rai Gupta states. “AI is one such possibility. Every segment of procurement comes with its own risks and requires its own expertise and tool sets.
“To manage that whole ecosystem is where that orchestration comes in. There’s a real beauty in this because it’s collaborative. It makes the whole bigger than its parts.”
We chatted with Johan-Peter Teppala from Sievo about why procurement needs to use technology wisely.
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When CPOstrategy attended the DPW NYC Summit back in June, one of the buzzwords of the day was trends. Trends in procurement, trends in technology, and how to combine the two. The event was filled with productive discussions around how procurement can benefit from data and advanced technology. This led to a hopeful vibe throughout the day, despite and because of acknowledgements of procurement’s shortfalls.
We caught up with Johan-Peter Teppala, Chief Customer Officer of Sievo, at the NYC conference. For Teppala, that hopefulness is something he took away from the event. “It is great to see so many companies out there with keen interest in adopting new securities and technologies,” he says. “Procurement has increasing demand to do more with less, which explains also the need for technology to drive efficiency and to deliver more. I think it’s just inertia that’s slowing us down.”
However, advanced technology is helping shift the inertia that’s so prevalent across procurement. “Developments in GenAI have been exceptionally fast, especially recently,” Teppala adds. “With an increasing amount of practical Gen AI use cases, this has become a topic that touches each and everyone in procurement. At Sievo, we are dedicating R&D budgets to AI innovations. We have quickly been able to ramp up many practical use cases for our clients to deliver business value in this area.”
Using data and technology wisely
Teppala continues: “Sievo strives to withhold our position as the leading Procurement Analytics partner for large enterprises. We are driven by the goal to close the data-to-action gap. We believe analytics alone has zero value, it’s the actions that we take that drive the value.” This was a topic that was repeated several times during the DPW NYC Summit.
“As a result, SIevo’s goal is to ensure our customers can use their time most efficiently. We help them make business-impacting decisions and best use their expertise, whilst Sievo automatically surfaces insights that they can take action on. First and foremost, our work is about carving out insights. And once you have those insights, how do you automate those actions to create opportunities? That’s definitely one thing we’re keen to solve.”
Sievo is also focusing its attention on gen AI – how it can be adopted and what the use cases are. “AI for data cleansing has been around for a while,” says Teppala. “Right now, Gen AI is getting really good traction from a technology point of view. It’s not just insights, but adopting AI into chat interfaces, and reaping the benefits with implementable actions. It’s amazing.”
The changing talent landscape
The increased adoption of AI is going to also change the talent landscape within procurement. Another heavily-discussed topic during DPW NYC was the talent shortage and how it has the potential to slow procurement down. However, advanced technology may be the thing that accelerates it once again.
“The talent you need is changing,” says Teppala. “The procurement mandate has widened beyond delivering cost savings. Now, it’s also about driving sustainability initiatives, emission reductions, increasing diverse spending, and preventing supply chain risks. Procurement has to be creative and resource-effective for reaching ideal outcomes. This is a big challenge but also a big opportunity and also impacts the talent needed in procurement.
“You don’t necessarily need to hire superstars who know everything. It’s about teamwork. Building a procurement team out of people who possess all these modern talents, who can support each other. I can’t know whether this is going to solve the talent shortage, but at least we’re shifting towards a different kind of talent as capabilities change.
Teppala concludes: “We need to be thinking more about what kind of team we actually want to build – not just what kind of really good, talented individual we can find.”
For a company like TealBook, data is king. The organisation helps businesses to navigate the complex supplier landscape by offering…
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For a company like TealBook, data is king. The organisation helps businesses to navigate the complex supplier landscape by offering a foundation of high-quality data. This is something that’s often sorely missing in procurement.
“We have a data problem,” Stephany Lapierre, CEO and Founder of TealBook, told us when we caught up with her at the DPW NYC Summit in June. “It’s always been my view that we don’t have a software or people problem – it’s data. If we could achieve better data – no matter the data stack, no matter the maturity, no matter the vertical – it would be truly transformative.”
Creating a data foundation
Lapierre has watched procurement’s attempt to tackle advanced technology without good data. Simply buying software is the easy part. Some have even tried to build their own architecture around that software. However, that’s often unsuccessful and highly manual. This is what led to the creation of TealBook.
“We’re in this pursuit of how we can deliver to the market,” Lapierre states. “We’ve been building a trusted data foundation for eight years.” More recently, the second version of TealBook’s service is significantly more powerful than the first. This allows it to ingest data at speed and set up new data sources within a couple of hours. “The more data sources, the more suppliers we’re covering, the more attributes per supplier. And, the more signals to improve the TrustScore and the confidence behind the quality of our data.”
Never ignore the fundamentals
The fact that quality data is all too often overlooked in procurement in favour of advanced technology was something of a theme at the DPW NYC Summit. The opinion of Lapierre is that there’s little point in implementing advanced tech without first having usable data in place. Many others at the event felt the same.
“It’s like buying a house because you love the house, but paying no attention to its foundation, plumbing, or electrics,” she explains. “Procurement has been buying up technology solutions, wanting to see the workflow, the UI, what it can do. However, people aren’t asking where that data comes from. How is it being evaluated? What about the compliance side of having suppliers populating a portal?
“Procurement has more and more requirements to get more and more data, so filling the gaps becomes more difficult. There are also increasing demands for transparency, and for regulators to have better quality information. When you’re reporting something, you have to really trust that information. That’s how you give confidence to your board or leadership team.”
A shift in focus
The upside of this disconnect is that Lapierre fully expects the pursuit of better data to be a key trend in procurement over the next few years. “I’ve found that no-one talks about the data layer in procurement,” she states. “They brush it under the rug or underestimate how critical it is to use data to feed large language models for better insights. As data becomes more accessible, the need for a trusted data foundation becomes more important. You need good data posture.”
With this very topic being discussed openly at prestigious events like the ones DPW hosts, procurement professionals and leaders are actively working towards solving this blockage. “The problems have to be solved in order to leverage the exponential value of Gen AI, automate workflows, and bring intelligence in across all these functions,” Lapierre continues.
“Consider: what would it mean to your business if you could actually solve that data problem, drive better outcomes, and truly digitise the procurement function?”
Brendan Ryan, Client Director for Coventry Building Society within the Cognizant Business Group, discusses the evolution and development of the partnership
The partnership began when the Society asked Cognizant to review their test services and the collaboration later developed into advisory and consulting. Throughout the years, the relationship has evolved and Cognizant recently developed Coventry Building Society’s strategy for cloud transformation, helping them align their business values with their technology.
Overseeing the key strategic relationship is Brendan Ryan, who serves as Client Director for Coventry Building Society within Cognizant. Ryan reveals the partnership is very much a long-term and collaborative effort. “Working in partnership and collaboration with Coventry Building Society, we were particularly successful around the end-to-end journey from advisory to delivery,” explains Ryan. “As part of the Society’s cloud transformation journey, we were able to select the cloud provider, assess their migration readiness, ensure their security and compliance controls and improve their resiliency. We also looked at derisking their legacy on on-premise infrastructure estate as part of it to make sure they’re more resilient.”
Cognizant is a professional services and IT consulting business operating with a global workforce of around 350,000 people. The company differentiates itself across banking, financial services and other industry verticals on digital modernisation and cloud transformation. Ryan believes the collaboration works well due to both companies’ open and transparent approach. “Cognizant is very flexible in the way we work, and Coventry Building Society is also very easy-going in their approach to us too.
Brendan Ryan is the Client Director for Coventry Building Society within Cognizant
“Outside of the day-to-day consulting and delivery, we’ve worked with them through their outreach programmes while also taking the suit off and getting dirty with them,” Ryan explained, pointing to several of Coventry Building Society’s community projects that Cognizant has supported, including painting a local youth centre and running careers fairs. “Having that more personal engagement with them is important. At the end of the day, it’s a relationship and a partnership we’re trying to build, and trust plays a vital role. It’s not just a transactional engagement.”
Looking ahead to the future of the partnership with the Society, Ryan is full of optimism for the direction of travel. “It’s exciting times for Cognizant as we embark on new endeavours and as a partner, we’re looking forward to supporting Coventry Building Society as best we can on that journey,” he says. “We’d like to inject a lot more innovation into the way they work, their infrastructure and application estate, particularly around generative AI, but also foster an innovation agenda within their user base.”
Click here to read more about Coventry Building Society’s journey towards operational transformation, ESG leadership, and positioning procurement as a creator of social value and community engagement.
Our cover story this month features a fascinating discussion with Rebecca Howard, Head of Supplier Relationship Management at Coventry Building…
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Our cover story this month features a fascinating discussion with Rebecca Howard, Head of Supplier Relationship Management at Coventry Building Society who talks operational transformation, ESG, and procurement as a creator of social value and community engagement…
Social values
The role of procurement has changed. Today, the function has become a driver of so much more than cost reduction and business continuity. In the past few years—especially since the pandemic—procurement’s potential to not only support sustainable practice, digital transformation, and supply chain resilience, but to champion the values of the business as a whole has become increasingly evident.
Coventry Building Society touches the lives of millions of people across the UK. We help them save and borrow to support their goals and livelihoods. “We’re owned by our members and our core belief is that we put our members first,” says Rebecca Howard, Coventry Building Society’s Head of Supplier Relationship Management. “Our members want us to keep their money safe and have an impact on people’s lives. That’s why our purpose is making people better off through life.”
Elsewhere, we also have an exclusive interview with Deputy Chief Procurement Officer of IDEMIA’s Smart Identity division, Mark Janssen who discusses his procurement journey with IDEMIA. It’s a role that’s putting trust at the heart of his approach to partnership, procurement, and innovation…
For governments, trust in a company like IDEMIA to deliver reliable identity solutions is vital. Vital not only to the wellbeing of their citizens and institutions, but for national security. Mark Janssen, Deputy Chief Procurement Officer of IDEMIA’s Smart Identity division, emphasises this: “If a government runs out of identification documents, it triggers an immediate crisis.” Without valid forms of ID, he continues, citizens can’t travel, buy a house, or register a newborn child.
Shelley Salomon, VP of Global Business at Amazon Business, discusses her company’s commitment to fostering gender diversity in procurement… Procurement’s…
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Shelley Salomon, VP of Global Business at Amazon Business, discusses her company’s commitment to fostering gender diversity in procurement…
Procurement’s gender imbalance isn’t new.
Traditionally, the function was regarded as a male-dominated profession. But change is afoot, in more ways than one. While a digital transformation amidst technological innovation is well-publicised, another evolution is underway within the workforce.
Gender diversity has become an important component of many company strategies globally. While progress to encourage more women into procurement has already started. There still remains an imbalance, particularly among those holding leadership positions. With current statistics suggesting around one in four leadership positions are held by women, there is still room for improvement.
So, is progress happening quickly enough? Shelley Salomon, VP of Global Business at Amazon Business, discusses her organisation’s commitment to fostering gender diversity and how women can reach parity in procurement.
In your opinion, where is procurement today in terms of women’s representation in 2024?
Shelley Salomon: “Women’s representation in procurement has seen progress these past few years, but there remains room for further improvement. Gartner’s data shows that women comprise 41% of the supply chain workforce. It’s encouraging to see greater gender diversity within the industry.
“While these statistics are encouraging, they also highlight ongoing challenges. Particularly at the leadership level. Only 25% of leadership roles are held by women. This disparity underscores the need for sustained efforts to promote gender diversity and support women’s ascension to senior positions within procurement.
“My perspective on this trend is one of cautious optimism. The progress we see is promising, reflecting a growing recognition of women’s unique contributions to procurement roles. Diverse perspectives and gender equity are vital for effective decision-making and problem-solving. Additionally, multiple credible studies show that companies with the greatest gender balance in the C-suite are likelier to achieve above average financial results. However, much work must be done to ensure these advancements translate into lasting change.”
While progress to encourage more women into the workforce seems to be underway, there is still a major disparity in the number of women leaders in procurement. What is the best way to go about rectifying this?
Shelley Salomon: “I believe there’s a significant opportunity to welcome more women into procurement leadership roles. By establishing robust mentorship and sponsorship programmes, organisations can provide invaluable guidance, support, and networking opportunities. Thus empowering women to thrive in their careers and gain visibility within the organisation. Investing in inclusive leadership development programmes is essential. These initiatives focus on building inclusive skills and readiness for leadership roles, continuing to foster a more inclusive and dynamic workforce.
“In my opinion, implementing inclusive hiring practices that actively promote gender diversity, such as using diverse hiring panels and conducting blind recruitment processes, is essential to minimising biases.
“Lastly, setting clear, measurable goals for increasing the number of women procurement leaders and regularly reporting on progress to hold leadership teams accountable can drive meaningful change. By taking these proactive steps, organisations can create a more equitable environment that supports the advancement of women into leadership roles within procurement.”
Sagi Eliyahu, Co-Founder and CEO at Tonkean and Alejandro Fernandez, Head of Global Procurement at Semrush, discuss the power of intake orchestration and procurement’s rise to the top of the agenda in the c-suite.
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In a world with almost endless possibilities, why waste time on manual or outdated processes?
Technology is an enabler in everyday and business life. It is there as a vehicle of change and a weapon of efficiency. When used correctly, AI can help people focus on higher-value and more fulfilling work – which is what an entire generation of people crave today. The problem is, technology is not leveraged as efficiently or as strategically as it could be today — especially in enterprise back-office operations, like procurement.
This is where Tonkean comes in. Tonkean is a first-of-its-kind intake orchestration platform. Powered by AI, Tonkean helps enterprise internal service teams like procurement and legal create process experiences that transform how businesses operate. In part by changing how internal teams leverage smart technology to empower the employees they serve to do better, higher value work.
Process orchestration
Process orchestration refers to the strategy — enabled by process orchestration platforms — of coordinating automated business processes across teams and existing, integrated systems. These processes can facilitate all procurement-related activities. Importantly, they can also wrap around an organisation’s existing systems and accommodate employees’ many different working preferences and styles.
Instead of simply adding to an organisation’s existing tech stack, process orchestration allows companies to use their existing mix of people, data, and tech better together. The true promise of process orchestration is to finally put internal shared service teams like procurement in charge of the tools they deploy.
This goes a long way towards solving one of the enterprise’s most vexing operational challenges: the inefficiency of over-complexity born of too much new technology. It also allows procurement teams to truly make their technology work for them and the employees they serve. As opposed to making people work for technology. Process orchestration breaks down the silos that typically separate working environments. No longer do stakeholders have to log in to an ERP or P2P platform to submit or approve intake requests. The technology will meet them wherever they are.
All in one place
Enter Sagi Eliyahu, Co-Founder and CEO at Tonkean. He explains that over the past few years, Tonkean has focused more on procurement specifically. In part because the challenges the procurement function faces day-in and day-out represent perfect orchestration use-cases. Procurement processes touch so many different teams, tools, and departments. Poor procurement performance can often be traced back to the fact that all these moving parts otherwise aren’t able to communicate easily with each other. Tonkean was built to address exactly that problem.
“We saw that our procurement customers were having great success with it, but the market started to heat up as well,” he reveals. “It made sense because it happened for us on the procurement and legal side. They are teams that are very central to an organisation and their process is never just siloed into their tools and department. You need that idea of orchestrating all the different moving parts for it to have high adoption, faster cycles, better quality and compliance.”
Tonkean and Semrush partnership
One of Tonkean’s biggest customers is Semrush. Semrush, in turn, understands the potential of orchestration in procurement well. As a result of Tonkean’s intake orchestration capabilities, they’ve almost halved cycle times for intake requests — from 19 days to just 10. Alejandro Fernandez, Head of Global Procurement at Semrush, works closely with Eliyahu and Tonkean and couldn’t be happier about the collaboration…
Supply chain 4.0 – where preparedness and opportunity meet in the digital supply chain
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Supply chains matter. One break in the link and manufacturers can be left with costly disruptions that bring the entire operation to a standstill – and the problem isn’t going away soon. According to McKinsey research, disruptions lasting a month or longer now happen every 3.7 years on average. Whether it is issues securing raw materials, a steep rise in shipping costs, labour shortages, geopolitical conflicts, or sustainability concerns, the pressure is mounting on manufacturers to diversify their supplier partnerships and introduce more flexible operations. For manufacturers determined to create more resilient supply chains, Andrew Newton, Business Central Consultant at Columbus UK, argues that a digital transformation of supply chains will be integral to the industry’s ongoing survival.
Industry 4.0 has been the main driving force behind recent supply chain transformation with the introduction of IoT technologies such as cloud, data analytics, and AI throughout the manufacturing ecosystem. This includes smart factories that enhance manufacturing with Industry 4.0 tech and smart products offering internet-based services.
It’s now time for the supply chain to step up to the 4.0 digital plate. Market leaders, particularly in the automotive and electronics sectors, have already launched digital transformation initiatives to establish flexible and high-performing supply chains. And manufacturers of all sizes can learn from their example on how to achieve sustainable change.
When disruption is constant, an organisation’s preparation for supply chain changes will provide a significant competitive advantage. From effective data connectivity to reshoring operations, operationalising AI, and implementing a long-term sustainability agenda – successful manufacturers must be able to incorporate these factors into supply chains to drive innovation and redefine how products are created, developed, and delivered to meet evolving consumer demands.
Unearth actionable findings within the data haystack
Many businesses now have extensive data archives spanning several years, including substantial sales orders and operational performance records but the ability to extract maximum value from this data remains a common challenge. Manufacturers want to establish robust connections with shop floor assets to unlock enhanced operational efficiency and make more informed decisions. However, many lack the data-related skills to successfully link their machinery or manage the influx of data streams from sensors.
This is where the introduction of business intelligence dashboards with Supply Chain 4.0 can offer real-time production insights to inform decisions, boost efficiency, cut costs, and refine product quality.
The convergence of operational technology (OT) and information technology (IT) adds to the data challenge, particularly where legacy equipment is still in use. It is important to recognise that the solutions being implemented require tailored approaches due to the unique demands of each manufacturing organisation. Developing applications within a business can be tricky, with not every business having the in-house data skills to do this.
Custom applications that don’t require extensive coding expertise can address this digital skills gap. Versatile solutions that combine low-code services, self-service analytics, and automation for instance, can make it easier for manufacturers to create applications that precisely align with their specific needs, boost efficiency, and innovate in the process. The establishment of a reliable data environment with Supply Chain 4.0 ensures that manufacturers can enhance decision-making and operational efficiency, all while reducing costly errors.
Operationalise AI to stay one step ahead
AI has left a mark on every industry and when it comes to the manufacturing landscape, the story is no different. Already many businesses are using AI tools to process real-time data from shop floor sensors to provide manufacturers with immediate insights and action, especially if quality measures breach thresholds. But the capabilities of AI don’t stop at detection.
Manufacturers must consider many factors in production and delivery, such as demand versus capacity and how much materials cost along the supply chain – and this is where unsupervised AI can be a useful tool for risk identification and market trend forecasting.
For instance, AI can suggest preferred suppliers to purchase from based on their supply chain history or issue alerts for impending weather events affecting supply chains. Social media analytics enabled by AI can also be used to project patterns to better understand where the market is heading but it can’t fully predict the future. Instead, the role of AI with Supply Chain 4.0 is to help manufacturers identify shifting consumer interests and trends, spot market trends relating to offerings or brand, and forecast waning or growing interest in product types.
I want it now! Proximity sourcing can help meet customers’ changing expectations
As supply chain disruptions become part of the new business environment, it’s time for manufacturers to end the reliance on disparate and siloed operations and instead look to nearshoring as the answer.
Customer expectations around delivery times are changing, with 62% of UK consumers now expecting next-day delivery when ordering online – an expectation that traditional offshoring business operational models now struggle to match. Yes, regional or local supply chains can be more expensive and add another level of complexity, but they do allow for greater inventory control and bring the product closer to the end customer, which reduces overall lead times. This reduction with Supply Chain 4.0 ensures that manufacturers can promote higher customer responsiveness and allows for constant improvement and innovation based on consumer feedback.
Nearshoring also provides an opportunity to clamp down on miles covered and will help manufacturers introduce a circular approach to operations. With over 4 in 5 UK adults recognising their role in lessening their environmental footprint, it is clear that the manufacturing industry needs to mirror this popular attitude – and technology will play a key role here. Automation techniques for instance can improve traceability and visibility over the entire product line, highlighting how businesses use and waste materials, along with how they can reuse products for better forecasting and reduce fossil fuel usage and pollution.
Particularly in the food industry, conscious consumers will base their buying behaviour on transport miles and the environmental impact of the product’s journey. If manufacturing businesses are able to clearly share this information with transparent supply chains, they will not only open themselves up to a larger customer pool but will also play a major role in tackling environmental challenges in the industry.
Long-term commitment to sustainability goals
Nearshoring is certainly one way that manufacturers can become more sustainable but with customer sustainability expectations rising, companies now have to show a long-term commitment to creating greener supply chains.
Many businesses are making efforts to report on internal sustainable efforts such as energy consumption but extending reporting down the supply chain poses challenges, such as effectively reporting on a supplier’s energy usage. To achieve a comprehensive sustainability profile, this reporting must span the entire supply chain.
Supply Chain 4.0 brings sustainability reporting tools that provide comprehensive tracking and analysis of environmental and social impacts, which will enable manufacturers to make informed decisions, ensure regulatory compliance, and communicate sustainable practices transparently. Manufacturers are looking to achieve this connectivity, particularly in linking shopfloor equipment usage with sustainability goals.
Leading organisations are pushing for data standardisation among their supply chain suppliers but this brings its own set of pros and cons. Increased standardisation can make the supply chain more efficient and easier to review, potentially reducing a company’s risk. However, there’s more work needed to establish this standardisation.
As public and regulatory interest grows, having a clear view of supply chain processes will become even more important. In the short-term, expect leading companies to keep investing time and effort to better organise their supply chain data.
Supply Chain 4.0 – where preparation and opportunity meet in the digital supply chain
Digital transformation is a long and complex journey but preparedness plays a key role in achieving optimal outcomes. Through the process of transformation, manufacturers can more effectively adapt to ever-shifting business conditions and evolving customer demands with Supply Chain 4.0, all while maintaining a competitive edge.
The issue remains that each manufacturer faces their own unique scaling challenges that require a calculated approach to processes, planning, and implementation to create a sustainable business model. Often companies have growth ideas but lack a clear path to achieve them. The identification of key supply chain trends will set apart the laggards from the market leaders
Businesses have been forced to navigate and adapt to these challenges to ensure continuity, limit interruption and reduce risk
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From Brexit to the pandemic and the current geopolitical conflict, the supply chain industry has faced a flood of challenges in recent years. This has caused disruption to supply chains. Businesses have been forced to navigate and adapt to these challenges to ensure continuity, limit interruption and reduce risk.
Alice Strevens, Director Human Rights and Social Impact, Mazars
As part of this, it’s increasingly important for businesses to ensure they have robust human rights due diligence processes in place. These processes support companies in their decision-making during crises, and help them identify risks in their supply chains. This ultimately protects them in both stable and unstable times.
Human rights and environmental due diligence provides a basis on which to address environmental, social and governance issues that impact supply chain resilience. Companies that respond to crises with an approach based on due diligence are more likely to protect their relationships with suppliers. Plus, they get to mitigate the impact on workers in their value chain. An example of this is during the Covid-19 pandemic. Many companies saw buyers abruptly cancel orders, request refunds in full and pause orders for months. With many suppliers facing reduced sales at the time, it led to questions as to whether businesses were working alongside suppliers. Or taking advantage of the circumstances to get reduced costs.
It’s important to learn from these lessons to build strong sustainable supply chain strategies. This will help businesses remain resilient both in stable times. And in the face of significant events. There isn’t a perfect formula. However, the concept of double materiality (i.e. considering sustainability matters from both the perspective of the impact on people and the environment, and the perspective of the financial risks and opportunities to the business) is helping businesses to assess sustainability-related risk strategically.
Supplier engagement will ensure long-term success
Building a sustainable supply chain for the long-term requires engagement and collaboration with supply chain partners. Long-term relationships can provide a basis to share challenging risks and impacts transparently. Human rights and environmental due diligence foregrounds the importance of engagement and collaboration to mitigate identified risks and build resilience.
The responsible supply chain strategy should be integrated into the overarching sourcing strategy and supplier engagement approach. Delivery against the strategy should be built into performance targets and incentives. Regular reviews of impacts, targets and KPIs should be conducted at board level. Making use of the latest technological developments, including assessing their risk for social/environmental concerns and measuring and tracking performance. This will help companies stay ahead and be prepared in their processes.
An evolving regulatory landscape calls for preparedness
Another important point to keep in mind is the legislative landscape. This is especially pertinent in the EU, as the rules will make previous voluntary standards now mandatory and will impact large companies. This includes those in their supply chain, including in the UK.
Companies should therefore look to base their strategies on the authoritative voluntary frameworks on conducting human rights and environmental due diligence. Primarily the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. This will set them up for meeting legislative requirements down the line. For example, Mazars and Shift co-wrote the UNGP Reporting Framework, which provides a framework for companies to adopt responsible practices, and manage human rights risks.
The future of supply chain is now
Ultimately, companies and suppliers should work together to ensure collaboration and a robust strategy which takes all parties into consideration. Listening to feedback and promoting good communication between stakeholders will ensure smooth sailing during the business-as-usual times. And the more tumultuous periods.
Implementing long-lasting strategies and creating resilience to risks will increase business’ market access and promote their financial value. Thus ensuring that they deliver quality goods and gain loyalty among suppliers.
Recent research conducted by InterSystems highlights a critical challenge within supply chain organisations in the UK and Ireland
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Recent research conducted by InterSystems highlights a critical challenge within supply chain organisations in the UK and Ireland: nearly half (47%) cite their dependency on manual processes for data collection and analysis as their primary technological hurdle. This reliance not only leads to inaccuracies and delays in accessing data but is also a significant barrier to the adoption of artificial intelligence (AI) and machine learning (ML), which almost one in five (19%) anticipate will be the trend that most impacts their supply chain.
Mark Holmes, Senior Advisor for Supply Chain, InterSystems
For AI and ML adoption to be successful, models must be fed healthy, unified data. This requires supply chain organisations to move away from manual data collection and analysis and adopt a robust data strategy to underpin their efforts. This data strategy will sit at the heart of AI and ML initiatives but will also play a bigger role in the business’ overall operational strategy.
Developing a smart data strategy
A smart data strategy should encapsulate three things: data collection, analysis, and integration into organisational operations. This is where technology like the smart data fabric comes in, helping supply chain businesses to do all three things and bring their data strategy to life.
Built on modern data platform technology, the smart data fabric creates a connective tissue by accessing, transforming, and harmonising data from multiple sources, on demand. In particular, smart data fabric technology allows supply chain businesses to leverage usable, trustworthy data to make faster, more accurate decisions.
With a wide range of analytics capabilities, including data exploration, business intelligence, and machine learning embedded directly into the platform, supply chain businesses will also gain new insights and power intelligent predictive and prescriptive services and applications faster and easier.
Once these solid data foundations are in place, supply chain organisations can begin to unlock the real potential of AI and ML to augment human decision-making.
Applying AI and ML across the supply chain
The use of AI and ML can deliver operational change across supply chain organisations, from improved demand sensing and forecasting, to optimised fulfilment. For instance, SPAR, the world’s largest food retailer consortium, has turned to ML to solve some of the difficulties it was experiencing in streamlining and optimising end-to-end fulfilment processes in stores across Austria.
Operating in the extremely fast moving food and beverage sector, and with more than 600 merchants in Austria, SPAR Austria required a better way to help managers of local stores control their inventory. It consequently deployed ML for real-time sensing of demand shifts to optimise replenishment and strengthen its supply chain network. This has significantly improved on shelf availability (OSA), demand forecasting, productivity, and time to decision. In turn, it also helped SPAR increase revenue and efficiencies.
ML can also be used for production planning optimisation, using different constraints including transportation cost, or component inventory allocation to improve fill rate and optimise product shelf-life, productivity, cost, and revenues. Additionally, with access to AI and ML-driven prescriptive and predictive insights, organisations will be able to reroute or resupply at the drop of a hat, helping to maintain operations, achieve on-time in-full (OTIF) metrics, and ensuring customer satisfaction.
The automation and optimisation of these different processes also has a material impact on those working in supply chain operations. It transforms their work from reactive to proactive efforts. With less time spent on processing, more time is freed up for strategic thinking to improve fill rates and lower transportation costs, for example, making their role more rewarding and value-adding.
A strategic approach to AI-driven transformation
The transformative potential of AI and ML in supply chain management hinges on a smart data strategy that moves beyond manual processes to a seamless integration of robust data collection, analysis, and usage. By adopting smart data fabric technology, supply chain organisations can resolve their primary technological hurdles, transitioning from reliance on inaccurate and delayed data to leveraging real-time, actionable insights that fuel AI and ML initiatives. This strategic shift not only enhances operational efficiency and decision-making but also paves the way for predictive and prescriptive capabilities that dramatically improve demand forecasting, inventory management, and overall supply chain responsiveness.
The success stories of companies like SPAR Austria demonstrate the profound impact of integrating AI and ML into supply chain operations. These technologies both optimise operational tasks and empower employees by shifting their roles from mundane, reactive tasks to strategic, proactive engagements that add significant value to their organisations. By adopting a smart data strategy and embracing these advanced technologies, supply chain businesses will realise benefits that extend beyond operational efficiencies to include improved customer satisfaction, increased revenue, and a stronger competitive edge.
Soqui Calderon, Regional Director of Sustainability for Grupo Modelo and the Middle Americas Zone, reveals how the beverage giant is tackling sustainability from a procurement and supply chain perspective
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Our exclusive cover story this month is with Soqui Calderon, Regional Director of Sustainability for Grupo Modelo and the Middle Americas Zone. She reveals how the beverage giant is tackling sustainability from a procurement and supply chain perspective.
Grupo Modelo is a giant and a leader in the production, distribution and sale of beer in Mexico. Grupo Modelo is part of the Middle America Region (of the AB InBev Group) and boasts 17 national brands. Corona Extra is the most valuable brand in Latin America. Its other brands include: Modelo Especial, Victoria, Pacífico and Negra Modelo. The company also exports eight brands and has a presence in more than 180 countries while operating 11 brewing plants in Mexico.
Through more than nine decades, Grupo Modelo has invested and grown within – and with – Mexico. It has also generated more than 30,000 direct jobs in its breweries and vertical operations throughout the country.
Grupo Modelo, like many forward-thinking companies, is currently focused on a drive towards establishing a truly sustainable business. This endeavour is best exemplified in the Middle Americas Zone (MAZ), where sustainability efforts have been led by for the past five years by Soqui Calderon Aranibar, Regional Sustainability and ESG Director. Ambitious targets have been established for the region, but some remarkable achievements have already been made. As Calderon says: “For our team, sustainability is not just part of our business, it IS our business.”
Sustainability in the MAZ
The Middle Americas Zone is made up of several countries: Mexico, Colombia, Perú, Ecuador, Honduras, El Salvador, Dominican Republic, Panama, Guatemala + other Caribbean islands. Each territory is home to its own brands that are household names in their respective countries. However, Grupo Modelo’s Corona beer, manufactured in Mexico, is one of the top five best-selling beers globally.
Calderon’s regional role means she travels extensively throughout the territories, engaging with all their businesses and collaborating closely with their partners and suppliers. Her job? To effectively outline their sustainability goals…
Elsewhere we have some incredible names imparting expert insights from companies such as Amazon Business, Source Day, DHL and Marriott International and lots, lots more!
Satya Mishra, Director, Product Management at Amazon Business, discusses how CPOs have become an important voice at the table to drive digital transformation and efficient collaboration.
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Harnessing efficiency is at the heart of any digital transformation journey.
Digitalisation should revolve around driving efficiency and achieving cost savings. Otherwise, why do it?
Amazon is no stranger to simplifying shopping for its customers. It is why Amazon has become a global leader in e-commerce. But, business-to-business customers can have different needs than traditional consumers, which is what led to the birth of Amazon Business in 2015. Amazon Business simplifies procurement processes, and one of the key ways it does this is by integrating with third-party systems to drive efficiencies and quickly discover insights.
Satya Mishra, Director, Product Management at Amazon Business, tells us all about how the organisation is helping procurement leaders to integrate their systems to lead to time and money savings.
Many people shop on Amazon. What is Amazon Business, and how is it related to procurement?
Satya Mishra: “More than six million customers around the world tap Amazon Business to access business-only pricing and selection, purchasing system integrations, a curated site experience, Business Prime, single or multi-user business accounts, and dedicated customer support, among other benefits.
“I lead Amazon Business’ integrations tech team, which builds integrations with third-party e-procurement, expense management, e-sourcing and idP systems. We also build APIs for our customers that either they or the third-party system integrators can use to create solutions that meet customers’ procurement needs. Integrations can allow business buyers to create connected buying journeys, which we call smart business buying journeys.
“If a customer does not have existing procurement systems they’d like to integrate, they can take advantage of other native tools, like a Business Analytics dashboard, in the Amazon Business store, so they can monitor their business spend. They can also discover and use some third-party integrated apps in the new Amazon Business App Center.”
Why would a customer choose to integrate their systems? Are CPOs leading the way?
Satya Mishra: “By integrating systems, customers can save time and money, drive compliance, spend visibility, and gain clearer insights. I talk to CPOs frequently to learn about their pain points. I often hear from these leaders that it can be tough for procurement teams to manage or create purchasing policies. This is especially if they have a high volume of purchases coming in from employees across their whole organisation, with a small group of employees, or even one employee, manually reviewing and reconciling. Integrations can automate these processes and help create a more intuitive buying experience across systems.
“Procurement is a strategic business function. It’s data-driven and measurable. CPOs manage the business buying, and the business buying can directly impact an organisation’s bottom line. If procurement tools don’t automatically connect to a source of supply, business buying decisions can become more complex. Properly integrated technology systems can help solve these issues for procurement leaders.”
Satya Mishra, Director, Product Management at Amazon Business
Beyond process complexity, what other challenges are procurement leaders facing?
Satya Mishra: “In the Amazon Business 2024 State of Procurement Report, other top challenges respondents reported were having access to a wide range of sellers and products that meet their needs, and ensuring compliance with spend policies.
“The report also found that 52% of procurement decision-makers are responsible for making purchases for multiple locations. Of that group, 57% make purchases for multiple countries.
“During my conversations with CPOs, I hear them say that having access to millions of products across many categories through Amazon Business has allowed them to streamline their supplier quantity and reduced time spent going to physical stores or trying to find products they’re looking for from a range of online websites. They’ve also shared that the ability to ship purchases from Amazon Business to multiple addresses has been very helpful in reducing complexity for both spot-buy and planned or recurring purchases. Organisations may need to buy specific products, like copy paper or snacks, in a recurring way. They may need to buy something else, like desks, only once, and in bulk, at that. Amazon Business’ ordering capabilities are agile and can lessen the purchasing complexity.”
How should procurement leaders choose which integrations will help them the most?
Satya Mishra: “At Amazon Business, we work backwards from customer problems to find solutions. I recommend CPOs think about what existing systems their employees may already use, the organisation’s buying needs, and their buyers’ typical purchasing behaviors. The buying experience should be intuitive and delightful.
“Amazon Business integrates with more than 300 systems, like Coupa, SAP Ariba, Okta, Fairmarkit, and Intuit Quickbooks, to name just a handful. With e-procurement integrations like Punchout and Integrated Search, customers start their buying journey in their e-procurement system. With Punch-in, they start on the Amazon Business website, then punch into their e-procurement system. With SSO, customers can use their existing employee credentials. Our collection of APIs can help customers customise their procure-to-pay and source-to-settle operations. This includes automating receipts in expense management systems and track progress toward spending goals.
“My team recently launched an App Center where customers can discover third-party apps spanning Accounting Management, Rewards & Recognition, Expense Management, Integrated Shopping and Inventory Management categories. We’ll continue to add more apps over time to help simplify the integrated app discovery process for customers.
“Some customers choose to stack their integrations, while others stick with one integration that serves their needs. There are many possibilities, and you don’t just have to choose one integration. You can start with Punchout and e-invoicing, for example, and then also integrate with Integrated Search, so your buyers can search the Amazon Business catalog within the e-procurement system your organisation uses.”
Are integrations tech projects?
Satya Mishra: “No, integrations should not be viewed as tech projects to be decided by only an IT team. Integrations open doors to greater data connectivity and business efficiencies across organisations. Instead of having disjointed data streams, you can connect those systems and centralise data, increasing spend visibility. You may be able to spot patterns and identify cost savings that may have gotten lost otherwise.
“It’s not uncommon for me to hear that CPOs, CFOs and CIOs are collaborating on business decisions that will save them all time and meet shared goals, and integrations are in their mix of recommendations.
“One of my team’s key goals has been to simplify integrations and bring in more self-service solutions. In terms of set-up, some integrations like SSO can be self-serviced by the customer. Amazon Business can help customers with the set-up process for integrations as well.”
How has procurement transformed in recent years?
Satya Mishra: “Procurement is no longer viewed as a back-office function. CPOs more commonly have a seat at the table for strategic cross-functional decisions with CFOs and CIOs.
“95% of Amazon Business 2024 State of Procurement Report respondents say the purchases they make mostly fall into managed spend. Managed spending is often planned for months or years ahead of time. This can create a great opportunity to recruit other stakeholders across departments versus outsourcing purchasing responsibilities. Equipping domain experts to support routine purchasing activities allows procurement to uplevel its focus and take on higher priorities across the organisation, while still maintaining oversight of overarching buying patterns. It’s also worth noting that by connecting to e-procurement and expense management systems, integrations provide easy and secure access to products on Amazon Business and help facilitate managed spend.”
What does the future of procurement look like?
Satya Mishra: “Bright! By embracing digital transformation and artificial intelligence to form more agile and strategic operations, CPOs can influence the ways their organisations innovate and adapt to change.”
Anthony Payne, Chief Marketing Officer of HICX, tells us how working collaboratively with suppliers on sustainable procurement practices could act as an organisation’s competitive advantage.
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Sustainability isn’t just a ‘nice to have’ anymore – businesses don’t have much of a choice in the world of 2024.
With ESG regulations now locked in place, organisations must comply or risk significant penalties. In order to achieve sustainability objectives more effectively and efficiently, collaborating with suppliers represents a real opportunity to get there faster.
When businesses work with suppliers to reach sustainability goals, they need access to the most accurate supplier data possible. However, obtaining this data isn’t necessarily straightforward. Ultimately, suppliers own it and need to provide it.
This means it is in a business’s interest to form and maintain a great working relationship with suppliers.
Anthony Payne, Chief Marketing Officer of HICX, the supplier experience platform, discusses the benefits of being supplier-centric and how giving brands a better experience adds value to organisations.
What is the link between businesses collaborating with suppliers, and suppliers being able to give them helpful sustainability information?
Anthony Payne: “There is a direct link. A good supplier experience makes it easier to communicate with suppliers because it allows for collaboration, whereas the opposite can harm communication efforts. For example, when businesses need ESG information, many will survey a broad group of suppliers even though the questions don’t apply to everyone. This is easier for the business. But it means every supplier who receives the survey must investigate whether it applies to them. The experience is more likely to frustrate suppliers than to help them offer the best information.
“Rather, we can help suppliers to help us by communicating better. The way forward is to segment suppliers into groups and send them only relevant requests. This creates a more positive experience in which suppliers are better able to provide helpful information.”
What about their motivation to help sustainability efforts – does this also rely on supplier experience?
Anthony Payne: “Yes, because if the culture of the business-supplier relationship is one in which each party looks out for themselves, then suppliers won’t be terribly motivated to offer the most helpful ESG information. It’s just human nature. Whereas if a business creates an environment in which suppliers can collaborate with them, then they’re more likely to become a customer-of-choice. This is a status worth having. A recent HICX survey showed that while 49% of suppliers would go the extra mile for their biggest customer, as many as 73% would make the effort if this was a customer-of-choice.
“Ultimately, if businesses give their suppliers a good experience, then more suppliers should be willing to provide helpful ESG information – even if it means spending a bit more effort.”
What are some of your most effective strategies and best practices to building a future-proof ESG framework?
Anthony Payne: “Businesses can futureproof their ESG frameworks by viewing suppliers as value-adding partners. This principle suggests three ways to engage suppliers…
“First, have a corporate mindset in which every employee views every supplier as a valued partner. If COVID-19 taught us anything it’s how much we rely on suppliers. When the pandemic hit, non-strategic suppliers such as providers of IT equipment and protective personal equipment suddenly became as central to operations as those who supplied the main ingredients. If we take the view that ‘all suppliers matter’, then it becomes easier to treat them all as partners in the same eco-system and we can work together towards common goals.
“Then, through this lens, we can market to suppliers. In customer marketing, a business would require a certain action from customers – such as getting them to buy a product, read a newsletter or attend an event – and so would motivate this behaviour. Similarly, in procurement, we can appeal to suppliers in a way that encourages them to participate in ESG activities, for instance, by providing helpful carbon emission information.
“One way to encourage the desired behaviour with suppliers is to segment them into the appropriate categories and send them only necessary messages. This is what a marketer would do with customers. By viewing suppliers as partners and introducing supplier marketing and segmentation, you can improve suppliers’ experience and get the most from them.”
What are the biggest barriers that organisations face to delivering more sustainable practices within their organisations?
Anthony Payne: “Once supplier data has been captured, however, the challenge continues because it must be maintained as a golden source of truth. Not having accurate supplier data is a major barrier to delivering sustainable practices because it means that businesses cannot see who all their suppliers are and what they’re doing.
“Thankfully, with robust onboarding and data management in place, businesses can keep their supplier data up-to-date and accurate so that it can inform good sustainability decisions.”
What is the best way for procurement teams to assess and prioritise the suppliers they work with? How do you juggle environmental impact vs value to company?
Anthony Payne: “The best way to assess and prioritise suppliers is to have visibility. Businesses need to know who all their suppliers are and what they’re doing, at any given time. Only once leaders are informed, can they make the best environmental decisions.
“It’s imperative to manage environmental impact with suppliers, regardless of how much value they bring a company. Apart from the moral obligation to protect the environment, businesses also have their reputations to consider. An environmental infringement that gets exposed – no matter how deep in the supply chain it might occur – is very likely to cause reputational damage, which can have a knock-on effect on sales and share price.
“In addition to brand reputation, businesses can also face expensive fines, if their suppliers are found to fall short of environmental regulations.”
What are the challenges and opportunities when it comes to supplier diversity?
Anthony Payne: “The challenge is to source the right suppliers in the first instance and then be able to report on their activity. We know that finding diverse suppliers in the UK can be difficult. While the US market is more mature, supplier diversity is growing here. Considering this, many suppliers that could qualify as “diverse” are not yet certified. Additionally, when diverse suppliers are indeed certified, there is no guarantee that their skillsets will match your needs.
“Thankfully there are ways in which businesses can proactively grow their networks of diverse suppliers. For starters, leaders can equip people within the organisation who work with suppliers, to find diverse suppliers by educating them and putting policies in place. Further, there are practical steps one can follow – such as defining the criteria for what qualifies a supplier as diverse in various territories and then finding the right businesses by searching online directories, desktop research and asking for recommendations.
“Once suppliers that are considered to be diverse are indeed found, they bring much value. Apart from being able to make a positive sustainability impact, the expectations of regulators, shareholders and consumers can be met. The by-product of this is a positive reputation which has economic benefits.
“The opposite logic also applies, and failing to capture supplier diversity value becomes a missed opportunity. For instance, when third-party expectations to support supplier diversity are missed, this can damage brand reputation which hurts sales figures and share price. Also, the unique offerings that diverse suppliers can offer will be missed, and with it the chance to make an impact. Therefore, it’s sensible to make the most of the diverse suppliers that you worked so hard to find.”
Do you have any tips for readers who want to make the most of the diverse suppliers they have sourced?
Anthony Payne: “Yes, you can start by knowing that it’s possible to make the most of the diverse suppliers you find. You can do this by following a stepped approach.
“Start by onboarding new suppliers who are considered ‘diverse’ with processes that reliably capture their information. This way, your diversity programmes can be well-informed. It’s hugely valuable to be able to tell, at the touch of a button, where a particular supplier might be based. Also, what qualifies them as ‘diverse’? And while they might hold diversity status today, how can we be sure it still applies tomorrow?
“With all the right information collected at the start of each relationship, then it’s a good idea to instill processes that drive everyone who works with suppliers to spend more with those who are considered as diverse. As more diverse suppliers join the organisation, then you need to keep their data accurate. Do this by digitally transforming the procurement landscape to make master data a priority. With robust processes, it’s possible to maximise your relationships with all suppliers.”
How optimistic are you about the future of ESG within procurement?
Anthony Payne: “I am very optimistic about the future of ESG within procurement, because, we’re seeing the supplier experience movement grow in the UK and the US. For instance, we’re seeing new job roles come out in this area as the principle is popularised. And we know that having good Supplier Experience Management programmes in place sets up business to procure in the most ESG-friendly way possible.
“And so, with Supplier Experience Management becoming increasingly popular, we believe that the future for sustainability is bright.”
DHL Group’s Erik-Jan Ossewaarde discusses the power of partnerships in the transition towards a green supply base, and how proactively fostering supplier relationships contributes to a more sustainable ecosystem…
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It’s hard to believe we’ve reached the 50-issue landmark. It’s been such an incredible journey and thank you to every single person who has helped us along the way! And our 50th issue has a suitably fitting cover story with which to mark this moment.
DHL Group’s Erik-Jan Ossewaarde discusses the power of partnerships in the transition towards a green supply base. And how proactively fostering supplier relationships contributes to a more sustainable ecosystem
Procurement has an important role to play in applying supplier sustainability initiatives in most organisations. We all know that. But, if you want to understand what that looks like in practice and how you transform the function to deliver on that promise, you could do a lot worse than spending time with Erik-Jan Ossewaarde and his strategy, sourcing, and procurement colleagues in his global cluster, as we were lucky enough to. Their job is to play a crucial role in delivering on the near-unmatched sustainability commitments set out by world-leading logistics company DHL Group to reach its goal of net-zero carbon emissions by 2050.
We speak to Özer Ergül, Group Head of Procurement at Aquila Group, about the way the business is leveraging its position to influence suppliers and improve ESG across the board
Investment and asset development company, Aquila Group, is one that takes sustainability seriously. It invests in and develops clean energy and sustainable infrastructure assets, meaning a focus on ESG is baked into the business with more than 15 years’ experience focused on climate change. And for Özer Ergül, Group Head of Procurement at Aquila Group, it’s the perfect canvas for his passions and expertise to come together.
Ergül’s background is a mixture of aerospace, automotive, and for the last two decades, energy. He started off his career as an Air Force officer and moved into the automotive world in the 1990s, just as the sector was undergoing huge and exciting changes. “Those early roles shaped my way of working, my way of thinking,” Ergül explains. “They showed me how to solve problems collaboratively, and I still use those tools and that knowledge to this day.”
Plus, we have fascinating exclusives with procurement leaders at Amazon Business Services, HICX and many, many more. Plus, all the latest news and events affecting procurement and its practitioners.
Unmanaged spend makes dark purchasing one of the biggest challenges facing procurement teams in uncertain economic times.
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As 2024 continues, procurement leaders are increasingly finding themselves under pressure to deliver strategic wins and drive efficiency.
Economic slowdowns, logistical disruptions, and looming political turmoil only serve to ramp up the urgency with which procurement teams need to find new ways to minimise costs while ensuring continuity throughout the value chain. Over 60% of procurement leaders report being worried about the impact of interest rates on their ability to invest during 2024, while
57% fear a recession during the year.
As a result, procurement teams continue to invest heavily into digital transformation. Many are adopting AI, spend management platforms, and automation.
However, efficiency gains within the procurement function itself might not be enough. This is especially true given the fact that many procurement budgets suffer from the influence of “dark purchasing”.
What is dark purchasing?
Dark purchasing occurs when companies source goods and services without the oversight or approval of procurement. Dark purchasing can stem from poorly organised procurement processes, leading to an opaque, decentralised purchasing structure. It can also occur as a form of corruption or negligence—again, thanks to a lack of procurement department oversight.
Whatever the cause, dark purchasing typically often results in higher costs, increased risk, and a lack of control over the supply chain. This harms the organisation, as funds are misdirected—both harming the company’s bottom line and preventing procurement from gaining the visibility they need to drive efficiencies.
The problem is almost ubiquitous. In 2023, a Globality report found that 82% of CPOs believe that their organisation’s indirect spend is poorly managed.
Bad data keeps procurement in the dark
A major contributor to dark purchasing is a lack of visibility stemming from bad procurement data.
A troubling 75% of procurement executives doubt the accuracy of the data they present to the rest of the business. As a result, 79% of non-procurement executives lack the confidence to use procurement’s data to make strategic decisions. Largely, this seems to stem from the fact many procurement teams still have manual processes embedded at critical points in their workflows. Specifically, speadsheets used for data entry and emails for communication account for the bulk of legacy procurement processes. Almost 80% of procurement professionals said their procurement teams do not have dedicated management software. This lack of software makes it significantly harder to track and manage their performance. Just under three-quarters were still using spreadsheets.
Manual processes increase time spent and, correspondingly, capacity for human error. Therefore, manual procurement increases the chances that blind spots will emerge where dark procurement can flourish.
Eliminating dark purchasing
A recently published paper from AmeriQuest argues that eliminating dark purchasing can increase procurement savings by 25%. In order to eliminate the phenomenon, procurement teams need to target the twin levers of control and visibility.
Largely, “dark purchasing depends on non-standardised processes and human error.” Therefore, eliminating the capacity for these within procurement and the organisation at large is a critical step.
“One of the first steps companies can take to fight dark purchasing is to clearly identify and assign procurement responsibilities within an organisation,” they write. In particular, internal stakeholders and C-suite executives “need to buy into the importance of a transparent procurement process” for dark procurement to be meaningfully reduced.
Tamra Pawloski, Head of Global Leveraged Procurement and Corporate Real Estate at Corteva Agriscience talks procurement excellence
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Our CPOstrategy cover story this month is…
Corteva Agriscience: Driving digital transformation in procurement
Tamra Pawloski, Head of Global Leveraged Procurement and Corporate Real Estate at Corteva Agriscience, talks process automation and talent development. Plus, she reveals how to drive continuous improvement while managing more than $3bn in spend…
Procurement leaders in today’s procurement sector face an ever-shifting landscape fraught with new challenges and mounting responsibilities. In light of shifting geopolitical pressures, souring economic conditions, and the worsening effects of the climate crisis, staying competitive requires constant evolution and agility. The strategic value of procurement has gained greater attention too. And so the expectations placed upon the function have also increased.
Tamra Pawloski, Head of Global Leveraged Procurement and Corporate Real Estate at Corteva
“When you get down to the root of it, the biggest challenge is that change is constant. If you stay still then you’re not going to be competitive,” reflects Tamra Pawloski.
Orange County: Procurement is all about relationships
Maria Agrusa, Chief Procurement Officer at Orange County, California, emphasises the invaluable contribution of her staff, whom she regards as the cornerstone of her organisation’s success…
Maria Agrusa, Chief Procurement Officer at Orange County
Innovative strategies. Smart technology. Solid contracts. Every procurement manager knows these too well. “However, without inspired and motivated procurement professionals, the procurement buzzwords are meaningless.” Maria Agrusa, the Chief Procurement Officer at Orange County, emphasises the invaluable contribution of her staff, whom she regards as the cornerstone of her organisation’s success. “Quality and engaged staff are indispensable for accomplishing our tasks”, Maria asserts. With over 25 years of experience in government contracting, Maria brings a wealth of knowledge and a strong commitment to elevating the procurement profession. Indeed, she was awarded Procurement Officer of the Year in 2020 and 2023 by the California State Association of Counties. Her diverse background spans various government procurement sectors, including healthcare and military. It’s a career that provides her with a breadth of experience that she aims to continue sharing with her procurement agents…
Focal Point’s Anders Lillevik and Alice Gumo discuss procurement in the digital age. And how their end-to-end solution enables the function to modernise, optimise, and drive value…
How do you run a successful procurement department on Excel and email, or on legacy infrastructure that makes the job more challenging than it needs be? The short answer, as Anders Lillevik and Alice Gumo can unsurprisingly attest to, is you can’t. At all. And that’s truer today than ever, with procurement professionals facing increased pressure and complexity. The need to add value beyond savings, for one, and a greater need for visibility and transparency across an increasingly broad remit of activities. Activities such as ESG, diversity and inclusion, and risk mitigation.
Landry Giardina, Sanofi’s Global Head of Clinical Supply Chain Operations Innovation & Technology talks data-driven performance, resilience, agility and operational excellence within the clinical supply chain area…
Landry Giardina, Sanofi’s Global Head of Clinical Supply Chain Operations Innovation & Technology
Sanofi has a mission: to chase the miracles of science to improve people’s lives, and sometimes that means starting over with Plan B, Plan C, or even Plan Z. Because to do so means to work across the most complex disciplines to solve problems, to push the boundaries and not be afraid to take smart risks. To dedicate everything to making life better for people everywhere. None of that happens without continuous and groundbreaking R&D and clinical trials to prove the medicines and vaccines it creates are safe and efficient for millions of people around the world. Which makes Landry Giardina and his colleagues’ jobs absolutely essential…
SourceDay: Delivering a higher level of performance and visibility in your supply chain
Tom Kieley, CEO and co-founder at SourceDay, discusses his company’s secret sauce and how it has risen to the top of the pile, delivering unified supplier collaboration for manufacturing customers.
Some of the best innovation is born through frustration with existing offerings.
Having built their careers in manufacturing, SourceDay’s founders grew tired of unnecessary costs, increased risk, and wasted time and productivity caused by ineffective supplier communication and incorrect ERP data. This led them to create a solution that would prevent direct materials inventory surprises and unnecessary costs. While also rebuilding trust between manufacturers, distributors, and their suppliers.
Today, SourceDay is a bi-directionally integrated platform for any ERP where the purchase order (PO) demand is generated. The company delivers 100% of purchase order demand to suppliers through the lifecycle of a PO. This is to ensure suppliers have no surprises and always have the most real-time, accurate source of truth. An ERP streamlines many of a company’s internal processes, but when it comes to keeping track of critical PO changes in a timely manner, procurement teams are still stuck in manual work. Spreadsheets, emails, and post-it notes…
Werfen: Procurement and supply chain excellence through teamwork
Don Perigny, Director Supply Chain, at Werfen, a Specialised Diagnostics developer, manufacturer and distributor, reveals how a strong work culture can achieve incredible success during challenging times…
It takes a village to raise a child,’ purports a famous African saying. It’s certainly a phrase that has struck a note with Don Perigny, Director Supply Chain at Werfen. For Perigny, the ‘village’ is Werfen’s supply-chain and procurement team, although he does extend the sentiment to Werfen’s wider network. It’s Werfen’s suppliers and partners who have kept the former professional sportsman busy at the company for over 21 years.
Werfen is a worldwide leader in the area Specialised Diagnostics for Hemostasis, Acute Care, Transfusion, Autoimmunity and Transplant. The Company also has an OEM division, focused on customised diagnostics. Werfen’s annual revenue exceeds $2bn with a worldwide workforce of 7,000, operating in approx. 35 countries and more than 100 territories through its network of distributors.
We join Perigny at his office in Bedford, Massachusetts. He’s just back from a week at Werfen’s San Diego offices, where he spent some quality time with his extended (work) family. And it’s soon clear that the people, the culture and what Werfen does for the world is crucial to Perigny and the wider workforce at the company…
CPOstrategy explores five ways CPOs can attract (and retain) top tier talent and why there is no one simple solution.
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Only a small fraction—less than one-fifth—of procurement directors and executives are confident in the ability of their current talent pool to meet the future demands of their organisations’ procurement functions. While these leaders were relatively confident in their current talent pools, the survey revealed a significant drop in confidence levels when considering their ability to address future demands.
The industry-wide talent shortage affecting procurement teams is driven by the compound forces of an increasing procurement workload, and the increasingly strategic nature of the field. Procurement is not just purchasing anymore; procurement professionals are expected to have greater business acumen, technical knowledge, and be “orchestrators of value” within the business. It is vital that the procurement leaders of today attract, retain, and develop the procurement professionals of tomorrow if they want to leverage the strategic potential of procurement beyond simple cost-containment.
1. Competitive salaries
Offer competitive salaries and benefits packages to attract top talent. This is while demonstrating the value placed on procurement expertise within the organisation. There’s plenty of content out there focused on company values and work-life balance to attract talent without paying for it. But just as cost is still at the heart of procurement you still need to pay people what they’re worth.
2. Professional development opportunities
Provide opportunities for continuous learning, skill development, and career advancement through training programs, certifications, and mentorship initiatives. Old attitudes concerning employee loyalty are disappearing faster than the housing market. Jobs that don’t provide room to grow will be vacant before long.
3. Embrace flexibility
Remote and hybrid jobs attract seven times more applicants than in-person roles. Despite what some opinion columnists at Business Insider and Bloomberg say, no one wants to live and die in a cubicle. Casual Fridays are hell on earth, and managers who resist flexible working arrangements need to face up to the fact that they are not only fighting a losing battle, but also hindering their company’s hiring potential in the process.
4. Foster a collaborative environment
Create a collaborative and inclusive workplace culture that encourages teamwork, innovation, and open communication. It is about fostering an environment where top talent can thrive and contribute their best. Businesses that practice DEI give themselves access to new and diverse perspectives. This is especially essential in an era of increased supplier diversity and nearshoring.
5. Use tech and make a big deal out of it
Getting the chance to apply cutting edge digital solutions to real-world problems is what people get excited about. By highlighting your organisation’s commitment to leveraging cutting-edge technologies and innovative procurement practices, your procurement roles will seem appealing to those eager to embrace new tools and methodologies. Successfully (and visibly) leveraging technology will also help combat the fact that, when it comes to recruiting younger staff, procurement’s reputation as a back-office function can hold it back. Leveraging AI, big data, and automation successfully can be highly impactful in boosting the function’s profile.
Technology and training are working together to lighten the administrative load faced by procurement teams.
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Over the last 18 months, attitudes towards ongoing economic (and political, oh, and climate) uncertainty seem to have finally pushed past a tipping point. Discussions of a return to some pre-2020 normal baseline appear to have been replaced by a more honest interrogation not of how we get back to where we were, but how we learn to deal with how things are.
Geopolitical, economic, and climate instability aren’t going anywhere, and the organisations that learn to adapt to this new state of affairs will be the ones to generate real value from their functions. “Procurement and finance teams are increasingly tasked with enhancing their organisation’s spend management,” writes Ruth Orenstein, Senior Director of Product Management at Tipalti. “This is crucial to ensure financial stability and resilience against fluctuating macroeconomic conditions.”
The growing trend, Orenstein notes, is a shift towards a “streamlined, decentralised P2P process, emphasising the importance of employee experience and the adoption of procurement-related processes.”
Rather than centralising procurement decision-making within a single department, decentralised procurement takes a freer hand, allowing individuals to make purchases for their own departments, instead of pushing all purchasing through a centralised team. Procurement, even for a mid-sized organisation, can encompass a huge variety of purchases., which can range from which ergonomic mouse pad to buy for a remote contractor to sourcing thousands of tonnes of raw material weighed against cost, time to delivery, and ESG goals.
When different teams specialise in different product categories, or when handling smaller and less impactful purchases, decentralising the procurement process can increase the speed and agility of an organisation’s spending.
Decentralised procurement: risk vs reward
There are obviously risks to adopting a more decentralised procurement strategy. Handing over purchasing autonomy to department buyers or individual employees carries an increased risk of overspend, fraud, and more dark purchasing throughout an organisation. There is also a risk that teams will spend an outsized amount of time monitoring spend, chasing down policy violations, and generally not saving any time.
However, the advantages can be significant, and procurement teams that successfully create strong procurement guidelines and parameters (digital marketplaces that allow department buyers to make acquisitions from a pre-approved list of goods can be a functional halfway point between centralised and decentralised procurement), as well as effectively educate non-procurement personnel in good buying strategies can successfully lighten their load, create greater agility, and overall improve the overall process throughout the organisation.
If every company in 2015 was a tech company that required employees to have a basic knowledge of the IT stack, by 2025, every company might just be a procurement company.
With cyber attacks on the rise, Chief Procurement Officers need to take a more active role in protecting their organisations.
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The number of attacks against supply chains is rising at an alarming rate, and increasingly it is the case that a business’ most common vulnerability is their supplier ecosystem. “If your company were to get breached, there is a 70% probability it will be through one of your vendors,” noted Norman Levine, a senior manager at Omnicom in a 2021 webcast. By 2025, Gartner predicts that 45% of organisations around the world will have been the subject of a cyber attack on their software supply chains.
Increasingly, then, CPOs have a meaningful role to play in standing between potentially risky suppliers and their organisations.
Robust cybersecurity
However, the increasingly complex and digitalised nature of the procurement sector isn’t making this job any easier. Baber Farooq, a senior VP at SAP Procurement Solutions wrote in a recent op-ed that “As companies and consumers increasingly rely on global, interconnected supply chains, procurement operations are now a favourite target for cybercriminals.”
According to a 2023 survey of CPOs by Deloitte, fewer than 3% of procurement leaders felt they had “high visibility” beyond the first tier of their supplier network.
“If enterprises don’t know who they are doing business with—directly and indirectly—it is almost impossible to manage risk proactively,” Farooq writes.
Setting the standard
Only by setting standards for their suppliers that garner real visibility deep into their supplier ecosystems, and then supporting that visibility with periodic monitoring is essential.
“For procurement leaders to avoid risks, they need to start from square one. That means performing due diligence during the supplier selection process and implementing continuous monitoring across their extended supply chains throughout their relationship,” argues Farooq.
“Risk Ledger reports that over 20% of organisations do not conduct cybersecurity due diligence before entering a contract. On top of that, 23% of suppliers do not have formal agreements in place with their third parties regarding security clauses. These situations compound the risks of cyberattacks and make an organisation increasingly vulnerable to a breach.”
Renowned procurement tech conference DPW has announced its first United States event will take place in New York City in June 2024.
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DPW has revealed it will host its first United States event in New York City following the event’s success in Amsterdam.
Having made its name in the Netherlands, DPW will now host its inaugural North American event at the NeueHouse Penthouse in New York on 12th June, 2024.
DPW in New York
The event will aim to spread awareness of DPW’s presence in a new market together with launching partners as it begins to expand out of operating solely in Amsterdam.
Back in November, founders Matthias Gutzmann and Herman Knevel travelled to Silicon Valley, California, to discuss an expansion into the United States.
Founder Matthias Gutzmann
Gutzmann said since 2018 he has harboured ambitions of bringing a procurement conference to New York. “Sitting in my Brooklyn apartment, I envisioned something revolutionary, something capable of harnessing the immense potential of digital procurement in unprecedented ways,” he confirmed. “Fast forward to today, DPW has evolved into the leading tech ecosystem for procurement and supply chain, with our annual event in Amsterdam drawing thousands of attendees and driving impactful change on a global scale.
“For years, I’ve been urged to bring DPW to the United States, and I am proud to say that day has finally arrived. Launching our event in the city where it all began is not only a milestone for DPW but a deeply personal achievement. The DPW NYC Summit is much more than just an event – it’s a testament to perseverance, innovation, and the power of a vision realised. Let’s shape the future together!”
Growing at speed
Knevel believes adding New York to its already popular Amsterdam event will bring another dimension to the organisation’s offering. “We want to engage with the community in the ecosystem on the East Coast and the Americas,” explains Knevel. “It’s also not the same format as Amsterdam as we bring people and the ecosystem together for a day with some great solutions and customers. It’s about understanding the ecosystem there a bit better and we plan to grow over the years to come.”
Since the launch of DPW in 2019, the conference has grown from strength to strength. In its October 2023 edition, DPW welcomed 1,250 procurement professionals with more than 2,500 virtual attendees watching along at home.
Procurement leaders have an outsized role to play in reducing Scope 3 emissions on the road to net zero.
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Chief Procurement Officers (CPOs) have been noticeably elevated within the business structure over the past few years — rising from pen-pushing back office functionaries to “orchestrators of value”.
CPOs are expected to deliver on more than just cost; supply chain resilience, agility, process innovation and, of course, ESG targets all increasingly fall within the realm of procurement, as company leadership increasingly looks to the function as a source of innovation, efficiency, and risk-avoidance. And, there’s no mistaking the risk that lies in failing to adequately address ESG targets. As Matthias Gutzmann, founder of DPW, wrote in a recent article for Fast Company, it’s “no secret that consumers are becoming increasingly conscious of not only what they’re buying, but who they’re buying it from, and how ethical those companies are.”
Unrelated to sustainability targets, but widespread boycotts levelled against Starbucks for their association with the Israeli government’s ongoing genocide of Palestinians, union busting practices across the US, and also anti-union practices as a direct result of pro-palestinian sentiment expressed by the SWU, have been a not so insignificant part of the coffee giant’s losing billions of dollars as its share price lurched downwards throughout December. Starbucks isn’t even on the BDS (Boycott, Divest, Sanctions) list, and still shed 7.4% of its share price in December.
It’s a high profile example, and not a typical example of a failure to comply with ESG goals (although “don’t be associated with a right wing government’s efforts to ethnically cleanse over 30,000 people” feels like it should probably make it onto most organisations’ to-do list) but the consequences are a clear reminder of the changing landscape that awaits organisations that fail (or just don’t want) to act ethically.
Gutzmann also notes that, in addition to hurting revenues, “These preferences also trickle down into employee attraction and retention, as Gen Z workers stepping into the workforce actively seek out organisations that share their values.” The result is the public actively favouring what he calls “purpose-driven” organisations.
However, there’s a significant challenge inherent in behaving with more ethical integrity and purpose as an organisation: while promoting ethical practices and environmentally friendly operations within your organisation is challenging enough, it pales in comparison to the task of ensuring such standards are adhered to throughout the entire sour-to-pay process.
For many companies, fixing their supply chain—whether that means tracking and curtailing Scope 3 emissions or distancing themselves from suppliers associated with deforestation or human atrocities like modern slavery—falls firmly at the feet of the CPO. Gutzmann notes that “While the transition to becoming a purpose-driven company requires buy-in from everyone within an organisation, perhaps no executive has had to take on more new responsibilities than the [CPO].”
If 90% of an organisation’s greenhouse gas emissions, for example, originate in its supply chain—along with other sources of environmental impact like resource and water consumption, human impact, land use, and more—then understanding and taking steps to curtail the negative impact of that supply chain is an essential part of a CPO’s role.
Gutzmann argues that CPOs will need to become “ethical sourcing enforcers”, adding that the benefits will often outweigh the cost. Not only will CPOs driving genuine ESG reform in their operations avoid potential risks from an alienated customer base but, he adds, “when asked if they would be willing to pay more for a product they could be sure was ethically sourced, more than 83% of consumers said yes. And we’ve seen that companies who prioritise ethical sourcing (ranging from outdoor clothing brand Patagonia to the ice cream giant Ben & Jerry’s) are rewarded with massive praise from consumers while also boasting impressive bottom lines.”
Since late 2015, N-SIDE has established and built on a strategic partnership with France-based pharmaceutical company Sanofi, aimed at optimising the firm’s clinical trial supply chain. The partnership helped digitalise Sanofi’s clinical supply chain while driving greater performance and waste reduction.
Harnessing efficiency
N-SIDE is a global leader in increasing the efficiency of life sciences and energy industries by providing software and services that optimise the use of natural resources, facilitating the transition to a more sustainable world. Founded in 2000, N-SIDE has built deep industry knowledge and technical expertise to help global pharmaceutical and energy companies anticipate, adapt, and optimise their decisions. In the life sciences industry, N-SIDE reduces waste in clinical trials, leading to more efficient, faster, and more sustainable clinical trials.
Amaury Jeandrain, Vice President Strategy of Life Sciences at N-SIDE, has witnessed first-hand the development of the partnership since he joined the company in January 2016. “Very quickly, the value of risk management and waste reduction was perceived internally and this partnership ended up growing to become one of our largest. Today, Sanofi is the company at the forefront of a lot of the innovation co-created with N-SIDE.”
Amaury Jeandrain, Vice President Strategy of Life Sciences at N-SIDE
Pharmaceutical companies of varying sizes use N-SIDE solutions to avoid supply chain bottlenecks in their clinical trials, decrease risks and waste, control costs, reduce time-to-market and speed up the launch of new trials. N-SIDE’s focus is on four key pillars to bring high levels of efficiency into Sanofi’s clinical supply chain: best-in-class supply chain, people, analytics and innovation.
Charlotte Tannier, Vice President of Life Sciences Services at N-SIDE, adds that the key differentiator is the transparency between her organisation and Sanofi. “We trust each other and know that we can be fully open with them,” she explains. “We like to build new things together and co-develop innovative solutions.”
Charlotte Tannier, Vice President of Life Sciences Services at N-SIDE
Teaming with Sanofi
Having defined a clear route to success through the Sanofi partnership, Amaury is keen to point out that the relationship has acted as something of a catalyst for future business collaborations with other companies. “There are a lot of good practices that were initiated with Sanofi that now became a standard in our industry,” he discusses.
Looking ahead, the future of the partnership looks bright and is showing no signs of slowing down. Charlotte explains that the next step is all about “integration.” “For the moment, we have multiple teams and departments that are using the N-SIDE solutions, and many other software are used as well within the organisation. The focus in the short term will be to enable a unified IT landscape and environment,” she reveals. “The objective will be to be fully integrated and to increase the impact of the data they own. Because we believe, with Sanofi, that the way forward is through data. We are also planning to help Sanofi leverage more of the data that we’re generating together to increase its impact.”
As technology continues to evolve and organisations become even more digitally mature, partnerships built on transparency and trust will be in demand. N-SIDE and Sanofi already have that head start.
Click hereto read more about how Sanofi is driving data-driven performance, resilience, agility and operational excellence within the clinical supply chain.
In this innovative partnership, the whole is greater than the sum of its parts as the two companies focus on taming tail-spend with an on-demand platform with embedded change management.
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Businesses have been leaving money on the table for years. For most organisations, (indirect) tail spend flies under the radar because of the large number of lower-value transactions, a fragmented supply base, and a poor user experience. This results in process inefficiencies and lost savings opportunities that can be eight to 13 percent higher than with more competitive sourcing.
Simfoni and Kearney set out to solve this problem, joining forces on solutioning tail spend management. The partnership pairs Kearney’s rich heritage and expertise in procurement transformation and change management with Simfoni’s composable analytics and spend automation technology. The result is a comprehensive global delivery model that significantly improves tail spend management, which until now has been a major problem for large and smaller organisations alike.
“We started our journey over three years ago,” says Stefan Dent, co-founder of Simfoni. “It takes some time to form a bond. You get to know one another working together on client engagements and then you realise that the relationship is really working, so you double down on the commitment.”
Simfoni helps businesses “see spend differently” leveraging data analytics to gain a deep understanding of user needs across everyday ‘tail spend’. Founded in 2015, Simfoni is a leading provider of tail spend, spend analytics, and e-sourcing solutions for large and midsize businesses around the globe. Simfoni’s platform uses machine learning and AI to accelerate and automate tail spend management, saving time and money. Its solution quickly ingests and organises complex data to uncover opportunities to optimise tail to higher value spend. Simfoni emphasises rapid value delivery through on-demand spend automation solutions that are operational in weeks rather than months.
Remko de Bruijn, senior partner at Kearney
The Kearney–Simfoni partnership delivers a unique and powerful proposition, combining Simfoni’s digital tail spend solution with Kearney’s know-how and ability to launch a transformation and unlock the promised value, says Remko de Bruijn, a senior partner at Kearney. “There are many digital procurement solutions around, but frankly, many of them aren’t delivering the promised value, typically because of challenges with user adoption and change,” he says. “Kearney continuously assesses solutions in the market, with one of our other partners, ProcureTech, and together, we concluded that Simfoni is leading in tail spend. This is how we found each other.”
Kearney is a leading global strategy consulting firm founded in 1926, with more than 5,700 people working in more than 40 countries. The company works with more than three-quarters of the Fortune Global 500 as well as with the most influential governmental and nonprofit organisations. Kearney is a partner-owned firm with a distinctive, collegial culture that transcends organizational and geographic boundaries—and it shows. Regardless of location or rank, the firm’s consultants are down-to-earth and approachable, with a shared passion for doing innovative client work that realises tangible benefits for their clients, in both the short and long term.
“We see Simfoni as a powerful solution to realise savings in indirect tail spend. It’s about not only data and spend automation, but also the customer experience,” De Bruijn says. “This is crucial when dealing with everyday spend as most users are non-procurement professionals.”
Kearney aids businesses in implementing Simfoni’s solution quickly, mitigating risks associated with unmanaged spend and vendors. “The attractive thing about Simfoni is that the solution manages tail spend—optimising both spend and vendors—with the savings funding the digitisation. It’s a tail spend solution that delivers a comprehensive service,” De Bruijn says. “Simfoni will even pay the tail suppliers with Simfoni becoming the ‘One Vendor’ for the tail, which creates additional benefits in accounts payables and working capital.”
Simfoni and Kearney both operate globally, which is important since their customers often operate in multiple regions around the world. “It’s a very interesting and powerful proposition,” De Bruijn says.
Stefan Dent, co-founder of Simfoni
Simfoni designed its tail spend platform from the ground up. The company founders came from the procurement domain, having worked in a variety of procurement leadership roles and at other procurement technology providers. “Let’s face it, existing solutions never solved tail spend, which accounts for around 80 percent of your vendors and transactions and around 20 percent of spend value,” Dent says. “Until now, the only options were BPOs, where you effectively outsource your tail to be managed by humans in a lower-cost country, or you use self-service bidding platforms. These solutions deliver some value, but it’s like putting a plaster on a wound. You never properly cure the problem.”
Simfoni’s platform is unique in that it is first and foremost a software-as-a-service (SaaS) solution with integrated buying services and digital procurement content components that connect with a client’s existing systems, or Simfoni can operate autonomously. Dent says that’s not even the best part. “The user experience is the most important element because, as Remko pointed out, most tail spend users are not procurement professionals,” he says. “Our users are in R&D, IT, plant operations, or marketing. They want an intuitive, easy-to-use solution to source and buy goods and services to support the everyday needs of their business. This is where traditional eProcurement systems fail.”
Dent says Kearney is an ideal partner being a trusted advisor to many of the world’s largest organisations. Kearney’s expert knowledge of procurement and transformation are a vital part of the offering. “Kearney’s input and expertise is crucial as Kearney helps our clients scope their tail spend program and update their procurement operating model while Simfoni frees up resources, allowing the client to focus on higher-value activities,” he explains. “At the end of the day, technology alone doesn’t solve tail spend. It’s about change. Kearney helps our clients make that digital shift. That’s why our partnership is so powerful because together we provide a comprehensive change and a digital solution as a package. The opportunity for our clients to finally control and optimise tail-spend is huge.”
Linda Chuan, Chief Procurement Officer at Box, discusses the value of delivering effective and long-lasting change management in procurement.
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Being at the forefront of change requires a specific type of person – it’s not for everyone.
But for those that are equipped to deal with the volatile and at times, disruptive, nature of change, that’s where the rewards can be uncovered.
Knowing this all too well is Linda Chuan. She is a seasoned sourcing and procurement operational excellence executive with a public accounting background and a strong ability to execute from vision and strategy. Her innovative experiences with organisations large and small have culminated in a unique, but practical end-to-end view and understanding of business processes. Chuan’s approach to problem-solving is holistic, mixed with a blend of discipline, creativity, agility and resilience. She has demonstrated successes in her execution and delivery with real results time and again, while also leading successful transformational digitisation strategies.
Procurement’s transformation
The industry she serves has undergone quite an evolution in recent times. Having transformed from a back-office function into a dynamic, exciting, enterprise division at the forefront of change. Procurement and its professionals have been on quite the journey in recent times. As such, Chuan explains that the space is, in fact, so unrecognisable that even its definition has changed. “Procurement started out as purchasing for primarily manufacturing companies decades ago,” she discusses. “Then it evolved from purchasing to procurement where the practice and the profession required more skills around understanding contract verbiage and how the commercial terms would impact the business. There was a little bit more skillset required, legal terms, understanding contracts, all the way to what we know today as strategic sourcing.”
Fast forward to 2020’s Covid pandemic and procurement was forced to shift again amid significant disturbance to supply chains. As a result, procurement was swiftly elevated to the c-suite and became front of mind for most CEOs globally as businesses looked to tighten their belts while urgently finding alternative methods of supply.
“Following Covid, I think we, as procurement professionals, are now mandated to be even more than strategic sourcing and add value to the company,” affirms Chuan. “We’re asked to look ahead and think about the macroeconomics as well as the microeconomics and how it could impact the company and get that translation to direct company impact earlier. This is all while being able to help either prevent large risks or promote opportunities within the company so they can then maximise what’s happening out there in the marketplace versus where everyone was reacting to what has already happened and trying to be prepared for what was coming.”
Tech disruption
Disruption has meant procurement was propelled to become even more strategic and forward-facing following a recent surge of black swan events as technology takes a firmer grip on the space. “The whole profession has evolved, especially over the last 10 or 15 years, where we’re becoming increasingly more strategic and important to a company.”
The company Chuan serves is a cloud content management company that empowers enterprises to revolutionise how they work by securely connecting their people, information and applications. Founded in 2005, Box powers more than 115,000 businesses globally, including AstraZeneca, JLL, Morgan Stanley, and Nationwide. Headquartered in Redwood City, CA, Box has offices across the United States, Europe and Asia. Chuan joined Box over four and half years ago and was recruited to help with establishing the firm’s procurement function and building it from the ground up.
“Any engagement or relationship with a third-party provider, whether it’s buying widgets, purchasing services or even SaaS across the entire company is under my scope,” she explains. “Box has grown globally to reach new regions such as Japan and Poland to UK and Australia. We’ve continued to grow even throughout the pandemic. It’s my third role to establish and build out a sourcing and procurement organisation from the ground up. I find that to be so rewarding and every company’s a little different. What might’ve worked in my previous roles may not work at Box. I love having to tailor and think about which processes and what systems could work that would fit each company’s specific and unique culture, executive level preferences as well as the employees. It’s very exciting.”
Blank canvas
For Chuan, her passion is to make things as easy as possible for the end user. She likes to think about a procurement organisation as a service firm. “We’re like a small entrepreneur company within an enterprise,” she tells us. “Our customers are our internal employees. As the company and the employee base grows, the customer base increases too. To me, it’s really imperative that we think about the user experience because every company has policies to check off, but who really ensures that we are compliant to those policies? A lot of other larger companies find it’s easier to make the policy a mandate where employees must follow, but I find that with high-tech companies, it’s more of a case of “influencing” rather than “mandating” in that kind of environment.
“In order to establish more of a centralised process where all of the employees would have to come through this one system and one intake, it has to be so user-friendly or else people are not going to want to come to you. If you make it easy for them and design the process in such a way that the policy is already incorporated, then employees will want to utilise the process. It should feel like they’re just going through the process, but they’re walking through the actual compliance policy and ensuring that we’re doing all the right things to protect the company, but they shouldn’t have to feel the burden of it.”
The Box Advantage
According to Chuan, unless she can show her people a new process or system that’s guaranteed to be more efficient, she understands there will be a degree of reluctance to accept change initially. “I’m already thinking about the whole change management programme at the beginning of when I need to select a solution, especially if there was an RFP involved, rather than waiting until we’ve selected a solution and are in the implementation phase. To me, that’s too late,” she explains. “Change management happens when a project has been approved for you to go find a solution or when the project has been initiated by your senior executives through an investment committee meeting or via a software review committee. That’s where change management actually starts.”
Chuan is passionate about harnessing a positive company culture. She stresses within Box operating with a mentality of collaboration, transparency and inclusiveness holds the key to success. Chuan explains that one of her best strategies is to imagine herself as an owner of a company as it leads to better decision-making. “It’s about always trying to think about doing the right things by the right people,” she discusses.
Secret sauce
“The culture is so special and it’s truly about walking the talk versus just talking the talk. It’s about making that culture real and living every single day like our two founders, Aaron Levie and Dylan Smith. The culture itself makes it easy to collaborate and build that relationship and that trust with my fellow employees, knowing that the procurement sourcing organisation is there to help protect them and make the company better. Doing it together is so much easier than trying to push through by yourself, and I call it with every deal that ‘it takes a small village’. We have a really, really good relationship with our legal department and with our vendor trust department. I am enjoying a level of engagement and utilisation of my function more than any other company I’ve been blessed to be a part of. The culture at Box is our secret sauce.”
Given the speed at which the procurement function is shifting, being proactive to the latest trends in transformation could be the key between success and failure. Indeed, one of the most highly anticipated innovations of the past few years ChatGPT has captured the imagination of procurement professionals globally. The race to explore the technology and examine how the natural language processing tool could be introduced into processes is already underway. However, its arrival brings with it fresh fears that AI is here to replace humans.
Future-facing
According to Chuan, that couldn’t be further from the truth. “I don’t see it as taking jobs away, I see it as improving our job and work life,” she explains. “Most people don’t want to do those mundane, low-level data entry, tactical tasks anyway. But if you don’t have people or the right system checking that the data going in is of good quality, then you can’t count on the reporting and the analytics on the backend. But the problem is that people don’t want to do it. Wouldn’t it be perfect to have a replacement with AI, robotics and machine learning that could do all of the things that people don’t really want to do anyway?”
Looking ahead
Having said that, Chuan is clear that there must always be some form of human influence and oversight over AI. One of procurement’s biggest challenges in 2024 and beyond is making new tech work for each respective organisation. Chuan believes procurement, and indeed the world, isn’t to be ruled by technology, but instead used as a tool. “There has to be some kind of monitoring and human judgment to QC/QA the results,” she says.
“I don’t think we’re at the point where machines can replace judgemental thinking. I think we need to have an eye on ensuring we’re doing the right thing ethically by people and making sure that we’re using technology responsibly. Let’s say we do all of that, the increase in the level of job productivity that AI could bring to many people should outweigh people’s fears. I don’t think we should be fearing it. I think we should be looking at it from an analytical and strategic view and get excited about the prospect of having all the time to be more innovative and forward-thinking. To me, that’s where the fun and rewarding work is.”
Hear more about Linda Chuan’s passion for delivering change management in procurement in our CPOstrategy Podcast.
This issue’s Big Question explores whether procurement would be better prepared should a similar situation occur.
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COVID-19 affected everyone in different ways.
It caused death, illness, chaos and disruption the world over. It shut down airports, overwhelmed the NHS and left our streets empty. With March 2024 marking four years since the UK announced its first national lockdown, how ready would procurement and our supply chains be in the event of a similar scale this time around?
To go forward, unfortunately, we must look at the chain of events last time around.
Having been declared a global pandemic on 12th March 2020 and with cases of coronavirus accelerating to uncontrollable levels, many businesses’ supply chains collapsed. When the pandemic hit, businesses were left footing the bill for billions of pounds worth of unsold goods, causing inventory-to-sales ratios to rise high.
As a result of lockdowns, organisations were left with no choice but to cut their activity or shut down entirely for a brief period as guidance continued to change at little to no notice. As such, production was halted in factories across the world causing mass layoffs and redundancies across the majority of industries, particularly in manufacturing and logistics, resulting in a reduction in shipping which affected delivery times globally.
Consumer demands also shifted significantly. The demand for personal protective equipment (PPE) as well as the likes of toilet paper and pasta rose dramatically. There was an increase in office furniture amid a surge in demand in remote working. This, alongside the likes of government help such as furlough, helped enable a surge in demand for e-commerce as consumers bought online in record numbers. The shift in demand for goods led to a reduction in experiences such as attending events, eating at restaurants or going out to pubs.
In order to meet this increase in demand, factories pumped out goods quicker than ports could handle them. US ports were full of exports from Asia with too small of a workforce to unload them and too few truck drivers to transport the goods. While ports were full, compounding the issue was a labour shortage, especially truck drivers. And talent remains a concern to this day to procurement and supply chain.
But COVID-19 is only one of procurement’s fires. There’s been the Suez Canal disaster, wars in Ukraine and Israel and inflation concerns to contend with too.
So if the worst were to happen and another ‘black swan’ event was to take place, what lessons has procurement learned?
As a result of the generative AI boom, Jack Macfarlane, Founder and CEO, DeepStream, believes that the industry is in a much stronger position to overcome a future pandemic. “It proved that procurement needed to brush up on its ability to adjust to black swan events swiftly by investing in the right technology and training for the industry to respond to sudden challenges and changes,” explains Macfarlane. “With the growing use of generative AI, the industry is now in a much stronger position to contend with a future pandemic. Generative AI can scrape vast datasets regarding global trends, using the data to predict shortages, price fluctuations and supplier risks before they happen.
“Regardless of the industry you’re in, procurement leaders should always focus on ensuring the right policies are in place to prevent declining quality control in a future black swan event.”
Omer Abdullah, Co-Founder and Chief Commercial Officer at The Smart Cube, agrees that procurement finds itself in a more secure place than that of four years ago. “Procurement is undoubtedly readier than it was prior to the COVID-19 pandemic. CPOs and their teams have learned where potential value drivers are, and they also understand supplier relationships and supply chain intricacies more intimately,” he reveals. “Procurement has also moved further along the digital spectrum. Organisations have tools at their disposal to operate effectively, and on a dispersed basis, should a similar event take place. Additionally, there are now far more risk management solutions in place versus before the pandemic – allowing practitioners to identify problems, and potentially risky situations, before they arise. Add to this more diversified supply chains and established alternative sources for essential categories, and the function is far more prepared than pre-2020.”
However, Abdullah went on to explain that while “no one would be absolutely ready for another unexpected pandemic”, he insists the industry did learn lessons from COVID-19. “It must be noted that there’s still a recency effect at play – procurement professionals tangibly remember the pandemic’s impact,” he explains. “As time progresses, though, this may change but for now, the industry knows how to operate if a comparable scenario were to unfold soon.”
Bindiya Vakil, CEO and founder of Resilinc, believes the pandemic has showcased how better prepared companies are for the next global disruption. “Fortunately, the COVID-19 pandemic taught businesses some valuable lessons. Not nearly as many companies are flying blind in the face of disruption,” explains Vakil. “Many organisations learned that having visibility into their entire supplier network is the foundation for mitigating disruptions. Mapping their supply chain down to the part-site level and then using AI-powered technology to monitor it 24/7 for potential threats gives procurement leaders an early-warning system with actionable insights to make mitigation plans within hours.”
While Vel Dhinagaravel, CEO and President Beroe Inc, reveals that COVID-19 “took the mask off” procurement and exposed the true character of teams. “Some were much more partnership-oriented and some a lot less. Some of these memories endure and will either help or handicap their responses to future disruptive events,” Dhinagaravel reveals. “During 2020-2022 as different countries and regions were in varied states of lockdown there were tremendous constraints on supply chains. As a result, procurement got an opportunity to be part of discussions around product mix optimisation and product pricing which previously had been largely off limits to them.”
He adds that while the future is uncertain, he believes the function is in a healthier position to thrive should the worst happen again. “Post-pandemic, these relationships have endured, and we have also seen these teams consciously building agility and resilience into their operating models and supply chain,” he discusses. “They’ve been using data and analytics as key levers to get visibility of their supply chain and suppliers – identifying points of failure, assessing scenarios, and proactively running simulations to develop diversification strategies. While these actions don’t give procurement a crystal ball to predict the next disruptive event, it puts them in a much better position to be able to handle another pandemic or major supply chain shock.”
And Betsy Pancik, Senior Vice President at Proxima, says that the pandemic was procurement’s “time to shine” with business leaders recognising the importance of a robust procurement function to keep business running smoothly. “COVID-19 caused major supply shortages, which drove price surges and quality issues – many procurement teams had to quickly mobilise capability and capacity to support immediate business needs,” she explains.
“Some companies learned this the hard way by not having the right processes and teams in place, which led to insufficient inventory, spend increases, and strained supplier relationships. Many companies realised the need for alternative suppliers to prevent these issues in the future and started proactively seeking additional sources of supply. Others realised the need for emergency buying procedures, systems, and processes that enable quick action, automated buying, supply chain visibility, and investment in talent – all of which will help businesses respond in a more organised and robust way if a similar situation were to happen again.”
In truth, procurement teams learned a lot from the events of March 2020. Procurement and supply chains can’t be complacent. The function can’t afford to let the mistakes of the past define its future. Supply chains must have alternative methods of supply and Chief Procurement Officers must be agile and ready to respond. Procurement can’t drop the ball and must stay ready.
Edmund Zagorin, Founder of Arkestro, discusses his company’s rise as a predictive procurement orchestration platform.
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“What if there was a better way to compare quotes from suppliers?”
This question led Edmund Zagorin down a road of discovery which culminated in turning an idea into a start-up.
While working as a procurement consultant, Zagorin observed how much time his sourcing teams spent building Excel pivot tables. The problem? Category experts needed to identify potential errors in supplier submissions at the item level before an award scenario could be properly evaluated. Together with childhood friend Ben Leiken, who had risen to become an engineering and product leader at SurveyMonkey, the idea was to find a way to automatically pre-populate text in a sourcing project with little to no manual data entry required from procurement users of suppliers. Leiken had seen firsthand the impact that so-called “smart defaults” could have on survey completion. And Zagorin knew that in procurement, more completions would mean more supplier offers, which could yield better commercial outcomes for the procurement team. Arkestro, then Bid Ops, was born.
Studies show that when procurement is able to predict a plausible range of commercial outcomes ahead of a supplier offer, there is enormous leverage created when the buying entity names the price. Summarising the past decade of research, Lewicki et al.’s 2007 “Essentials of Negotiation” states that “…whoever, the buyer or the seller, made the first offer… determined the final selling price, with higher final prices when a seller made the first offer than when a buyer made the first offer.”
For this reason, Arkestro customers began delivering material higher cost savings outcomes than traditional RFPs and RFQs, a fact that caught the attention of Ariba co-founder Rob DeSantis. Together, Zagorin and DeSantis brought together an experienced management team, led by IBM and Ariba alum Neil Lustig as CEO. Lustig’s experience as CEO of Vendavo, a predictive pricing company used by sell-side teams to achieve better negotiated outcomes, made him ideal to scale Arkestro into a global juggernaut.
Edmund Zagorin, Founder, Arkestro
Today, Arkestro is the leading predictive procurement orchestration platform that enhances the impact of procurement’s influence, especially for large manufacturing enterprises across any procurement activity and spend category that involves collecting a quote from a supplier. Arkestro turns the traditional procurement process on its head: instead of the supplier creating a quote or proposal and then a procurement analyst using competitive offers and benchmark data to decision the desirability of that offer or action an approval, Arkestro customers use a predictive model to benchmark a potential quote before contacting suppliers, putting procurement in a position of leverage to either ask for their desired outcome using an AI-generated Suggested Offer or generate an Instant Counter-Offer to any quote.
Arkestro then helps customers persistently monitor the changes in quoted price for this item across all procurement activities, tracking trends and changes and helping teams proactively uncover the optimal procurement configuration for each item and basket with respect to timing, geography, quantity, lead time and other attributes.
By embedding game theory, behavioural science and machine learning models directly into the procurement process, Arkestro enables customers to dramatically accelerate cost reduction projects, often with existing preferred suppliers and attain their best available cost outcome for every unique item more frequently and at greater scale across their spend. This predictive procurement approach is especially helpful for technical procurement categories such as highly engineered components, materials and capital equipment, as well as categories like metals, chemicals, food ingredients, MRO, packaging, logistics and even IT.
Enterprises who are on a journey to create sustainable and antifragile data quality for their procurement function are turning to Arkestro as the predictive approach eliminates the two manual steps that tend to introduce errors into item-level identifiers: the step where the supplier creates a quote, and the step where procurement analysts have to validate, correct, give feedback and approve it. By using a predictive model to generate and validate supplier offers, Arkestro offers a continuous improvement path for enterprises whose digital procurement journey includes cleansing item-level data to create a true item-based “data foundation.”
Transformation journey
And since its founding in 2017, Arkestro has been on quite the transformation journey. The company has expanded rapidly and scaled its product – as well as for spend categories and industries served – globally. In a little over half a decade, Zagorin, Leiken and their team have created a true enterprise grade AI infrastructure platform that can be embedded into the likes of spend management giants SAP Ariba or Coupa or used as a standalone database and application.
Despite significant success in a relatively short space of time, Zagorin is keen to stress that his initial vision was to solve a problem that he was also experiencing in the market. “Our growth has corresponded to a great degree with a widening of the aperture of where we feel predictive technologies can make an impact for procurement teams,” he discusses. “I think one of the other things just from a paradigm standpoint is that procurement processes involve a lot of manually created data. There’s a lot of data entry on the supplier side, procurement side and on the stakeholder side throughout the process. Every keystroke in every process introduces the possibility of human error.”
Predictive procurement is a new approach that suggests the data before a human user enters it. What Arkestro has introduced is the idea of predictive and working with customers to apply that at different stages of the procurement process through AI. “One of the things that’s also been interesting, and you’ve seen this in other areas of AI, is that you can cross a threshold where at some point in the model it gets good enough that it really provides exponentially more value as it’s being used,” he says. “As opposed to software, which traditional software degrades over time, it gets stale and the interface feels clunky. As new interfaces come out, AI has almost the opposite dynamic where it actually gets better. It’s smarter by itself just by people using it. That’s also been pretty exciting to see.”
Procurement’s evolution
Indeed, the procurement space is in a state of flux. Amid significant transformation driving the function forward, it has never been such an exciting time to be involved in the industry. The rise of AI and machine learning is having a seismic impact with there also being hopes that new technology could reduce the need to bridge talent gaps.
“If you asked five years ago what’s holding procurement back from digitally transforming the operation and living out your full potential, I think a lot of procurement professionals would’ve said how hard it was to hire,” Zagorin explains. “People were saying: ‘Oh we have data quality issues where it’s really hard to actually know what we’ve spent, what our spend per supplier looks like for our core geographies, let alone what we paid for each individual item. We went out and bought a bunch of digital platforms and we’re struggling to gain adoption which is related to the data quality issues.’ This is what I heard from executives when I was working in procurement. Because traditionally, if you have a process and it’s not being consistently used, then it’s not going to accurately represent the most important attributes or business logic of the data that’s moving through it.”
Despite the positive introduction of tech innovation, procurement has also had its challenges. Supply disruption as a byproduct of COVID-19, wars in Ukraine and in Israel as well as inflation concerns, it is fair to say the function has never been more talked about in the C-suite.
“Boom, there’s the next wave of Covid, or suddenly there’s a war somewhere in the world,” he shares. “It has felt like there’s always something and it really creates context switching for procurement teams which is stressful, plus being bad for productivity. This is especially the case for digital transformation projects in procurement, and it’s also demotivating because it makes people feel like they’re not making progress. This then means that the length of the project elongates and you have this kind of stuck-in-the-mud feeling that it’s hard to get quick wins and generate momentum. That’s what customers are thinking about as they are looking in the market to find a true partner not just for their digital journey, but for their AI journey.”
Given the speed of procurement’s evolution, there are voices that believe the function requires a rebrand. Gone are the days of procurement being regarded as a back-office function hidden away out of sight, today it stands as an exciting, dynamic force at the forefront of innovation. “I live in California where job titles are a little bit looser generally,” explains Zagorin.
“If we look at procurement needing a rebrand, the big challenge that I see with procurement is that the structure of a lot of these categories doesn’t necessarily correspond with either the activities associated with them or with the relationships with the suppliers within those categories. What we have in procurement with ‘category management’ is we’re frequently asking procurement professionals to be a jack of all trades and master of none within their categories. Perpetual ‘crisis-mode’ is not a recipe for letting up-and-coming procurement professionals develop the category knowledge and domain expertise that are traditionally necessary.”
Procurement’s bright future
Looking ahead, Zagorin believes there has never been a better time to be working in procurement. “The profession has a lot to offer, and it really is this huge engine of value creation at most big companies,” he explains. “Arkestro serves enterprise manufacturing companies typically with multiple plant locations which buy at both the corporate and the plant level creating a lot of item-level data quality issues. What we’re seeing is the ability for companies to get live on Arkestro in a matter of days and often deliver a payback period for their entire solution costs in a matter of weeks.
“If you look at deployments of enterprise technology five years ago, that’s a stark difference in terms of what procurement’s promising versus what it’s delivering and the time-to-value. We have a new generation of startups, from intake to tail spend to what Arkestro does, more on the strategic side and or on technical procurement categories and direct materials, often starting with a bill of materials and handling all the back-and-forth with the suppliers up to allocation, awarding and the purchase order. You have this cohort of startups that’s just getting bigger and more people are using us to run large physical manufacturing operations. There’s not a lot of direct competition in the space of these growth-stage startups.
“I think what’s going to happen is more and more companies are going to say if it makes business sense and we think there’s tangible value in doing it, then let’s find a way to test and learn. Let’s find a way to try it out to implement it in one geography or for one business unit or category and just see how it works. Five years ago, it was always easy to say we’re too busy or we have other stuff going on. What’s changing today is if you’re not testing and learning constantly from new technology, you’re going to miss out because the stuff that’s happening right now is world-changing.
“Generative AI and novel technical approaches to on-demand superintelligence are going to be as impactful to many enterprises as the development of the internet, not to mention human society at large. The people who are playing around with it and staying curious and running experiments are going to create a lot more value. They’re going to have a lot more fun, and they’re going to build great teams and organisations that lay the groundwork for the next generation of procurement professionals.”
Changing requirements, shifting demographics, and new technologies are conspiring to create a procurement talent shortage.
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Two of the biggest challenges facing procurement leaders are recruitment and retention. Staffing issues were identified as one of the biggest risks facing procurement in the next two years by Amazon Business’ 2024 State of Procurement Report, as the procurement function “broadens in scope while facing staffing shortages”.
It seems as though the more critical procurement becomes to the modern enterprise, the more the cracks in the talent pool begin to show. With increased technological adoption and a growing emphasis on strategic operations (compared to a traditional transaction-focused approach) in the procurement function, solving the talent shortage is more critical than ever.
As we’re still in early 2024, we’ve put together the top five factors driving the talent shortage, as well as how procurement leaders can address them in order to capitalise on the opportunities in the industry and meet the strategic objectives of the business as a whole.
1. Digital transformation
Ironically, the very trend that’s driving the rise in procurement’s fortunes is also one of the biggest factors fueling its talent shortage. As digital transformation reshapes the procurement function from top to bottom, it also means that the skills necessary to succeed in procurement roles are changing. Even a few decades ago, a procurement job was a mixture of relationship management and sending invoices. Now, there’s AI to grapple with, big data analytics, and an expectation that the department will be a key strategic driver of efficiency, sustainability, and supply chain resilience. The skill sets that make a successful procurement team today aren’t the same as they were even a few years ago.
How to fix It: Education and development should be at the forefront of anyone’s mind looking to build a successful procurement function. Upskilling and growing the team’s knowledge base is almost always more cost effective than hiring externally, but you should also know when to look beyond the department to fill a talent shortage, even if that just means sniffing around the IT department for anyone not nailed down.
2. Competition (internal and external)
If (almost) every procurement team is short on staff (well, 86% of them, according to Amazon Business), then it’s no surprise that competition for top talent is fierce. Salaries are rising, and the fact the talent shortage is affecting departments other than procurement means that procurement is in competition, not only with other procurement teams, but with other departments in its company for talent and the money to pay that talent.
How to fix It: Smaller firms without the resources to compete might consider outsourcing their procurement functions, engaging third parties like a business might engage a legal team or a management consultancy.
3. Messaging and awareness
Or lack thereof… Seriously, procurement may be the exciting new frontier of digital transformation and strategic optimisation, but traditionally the department has largely existed as an afterthought—a place where purchase orders go to be rubber stamped. The nature of the role may be changing, but perceptions are harder to shift. If the preconceived notion is that procurement is a stodgy, backwards profession, then it’s unlikely to attract the best and brightest graduates, let alone funnel MBAs into a procurement-specific pipeline early on in their education.
How to fix it: Take a leaf out of the broader supply chain discipline’s book and go on a two-pronged charm and educational offensive. By working with educational institutions and recruiting heavily from adjacent industries with transferable skills (increasingly easy to do given the increasingly digital-first nature of the discipline), new talent can be enticed into the procurement space and developed from there by existing veterans.
4. Demographic shifts
Tied into Number 5, the natural changing of the guard is a large part of what’s ushering in a more discerning labour force. It’s also seeing Boomers and Gen X either exit the workforce into retirement or be promoted up into senior management, where the skills that made them an asset to the company on a day-to-day basis are less important to their roles.
Also, as Millennials age up towards middle management there aren’t as many members of Gen Z entering the workforce to replace them. It’s the same further up the chain as the populous Baby Boomers are replaced with the relatively sparse Gen X.
How to fix it: One way to encourage a smoother transition from one generation to the next—especially in an industry where relationship management plays such a huge role—is to encourage mentorship and development aimed at transferring skills and key knowledge from senior staff to lower (even entry level) positions.
5. The Great Resignation
Sparked by the COVID-19 pandemic, as well as a general rise in pro-labour sentiment across the economy at large, the last few years have seen a spectacular rise in employees quitting the roles that couldn’t be bothered (or afford) to pay them enough or treat them fairly. The consequences for mismanaging teams are much higher in a world where the stigma over changing roles regularly for better pay, hours, and working conditions has more or less evaporated.
How to fix it: It should be obvious, but people keep quitting their jobs, so the message must not be getting through. The age of pizza parties and casual Fridays are over. Employees expect more from their employers, whether in terms of wages, benefits like healthcare, work-life balance, and other meaningful contributions to quality of life. In addition to benefits on paper, fostering positive cultures, creating opportunities for development and salary advancement are all a big part of not only attracting new talent but keeping it as well.
CPOstrategy cover star this month is Kristina Andric, Supplier Manager IT at Tetra Pak and recent CIPS Young Talent winner, who discusses the procurement landscape from her perspective and how Tetra Pak is nurturing young procurement leaders like her…
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This month’s cover star is Kristina Andric, Supplier Manager IT at Tetra Pak and recent CIPS Young Talent winner, who discusses the procurement landscape from her perspective and how Tetra Pak is nurturing young procurement leaders like her…
As a household name in food processing and packaging, Tetra Pak stands by having a customer-centric, strong, and competent procurement function.
As a result, it’s always working hard to evolve, which includes seeking out new procurement talent wherever possible. This is how Kristina Andric, Supplier Manager IT, became part of the team and kick-started an exciting career.
Andric started working at Tetra Pak in 2018 via a trainee programme called Future Talent. The programme lasted two years and gave trainees the opportunity to understand Tetra Pak from multiple perspectives. Andric was rotated throughout different parts of the organisation and across different geographies, the idea being to give young people a holistic view of the company before taking on a permanent role.
“Embracing change marked my career since the beginning,” she reflects. “My curious nature thrives on the opportunity to engage in diverse experiences and continuous learning. Challenges motivate me and develop my potential, so every change has been to my benefit. I’ve enjoyed it all.”
Elsewhere, we also have fascinating insights into procurement hot topics such as optimising tail spend with Simfoni and Kearney, amplifying procurement’s influence with Arkestro, while Box looks at The Art Of Procurement As A Change Agent. Plus, we detail 5 ways of tackling procurement’s talent shortage and discuss being prepared for future pandemics…
Could generative AI be the answer to procurement’s problems: fewer workers, more work, and a rising bar for digital literacy.
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It’s news to no one that the nature of the procurement industry has changed.
Spurred by the COVID-19 pandemic, an industry-wide surge in digital transformation, and the rising immediacy of the climate crisis, procurement has never been more important, or more complicated. However, as the industry’s demands grow and evolve, many procurement teams find themselves in need of skilled individuals that simply aren’t there.
A recent study conducted by Gartner found that just one in six procurement teams believe they have “adequate talent” to meet their future needs. That means just 15% of CPOs were confident in their future talent pools and ability to recruit skilled individuals, even if they believed their current staffing was sufficient to meet demand today.
Concerns over “having sufficient talent to meet transformative goals based around technology, as well as the ability to serve as a strategic advisor to the business,” were the primary cause of skill shortage stress, according to Fareen Mehrzai, a Senior Director Analyst in Gartner’s Supply Chain Practice. Essentially, the changing nature of procurement means not only that today’s procurement teams are unprepared for the discipline’s continued transformation from back office buyer to “orchestrators of value” in the executive team, but face an increasingly sparse hiring market as the requirements for a new procurement recruit become increasingly complex to satisfy.
Generative AI: Making digital accessible
Generative AI exploded into the public consciousness in 2023 with the launch of image generation tools like Midjourney and DALL.E, as well as chat-bots like Chat-GPT, powered by large language models. Investment has been immediate and almost unthinkably massive. In late 2023, it was estimated that generative AI startups were attracting 40% of all new investment in SIlicon Valley, and Bloomberg Intelligence estimates that the market for generative AI, valued at $40 billion in 2022, will be worth as much as $1.3 trillion in the next decade.
Now, whether or not generative AI has the society-spanning, epoch-disrupting economic and social impact people are predicting (personally, I remain unconvinced, and anyone who disagrees can either fight me in the metaverse or try to run me over with a self-driving car) actually manifests, there’s no denying generative AI’s potential as a useful tool if adopted correctly.
Especially in an underskilled, rapidly digitalising procurement sector.
How can generative AI help procurement?
While Generative AI will never write a (good) movie script or create a piece of art that anyone with any taste would find genuinely moving, there are some things it does very well. Namely, it is very good at not only taking in and processing huge (and I mean huuuuge) amounts of chaotic, poorly structured information and answering questions about it, but most importantly, it can understand prompts and give results in simple, conversational language. There are still limitations and kinks to work out, however.
Generative AI still deals with hallucinations. However, the ability to input huge amounts of data and analyse that data in a conversational format could alleviate a lot of the technological literacy related teething problems that appear to be at the heart of the procurement skills shortage.
An EY report notes that, in the Supply Chain and Procurement space, generative AI has massive potential to: “Classify and categorise information based on visual, numerical or textual data; quickly analyse and modify strategies, plans and resource allocations based on real-time data; automatically generate content in various forms that enables faster response times; summarise large volumes of data, extracting key insights and trends; and assist in retrieving relevant information quickly and providing instant responses by voice or text.”
The future of Gen AI
Generative AI can be a source of simplicity for procurement teams at a time when new technologies often add complexity and necessitate upskilling or new hires. EY notes that a biotech company using a generative AI’s chat function has had positive results when using it as a way to inform its demand forecasting. “For example, the company can run what-if scenarios on getting specific chemicals for its products and what might happen if certain global shocks occur that disrupt daily operations. Today’s GenAI tools can even suggest several courses of action if things go awry,” write authors Glenn Steinberg and Matthew Burton.
Adopted correctly, generative AI could not only empower procurement teams to handle the pain points of today, but also tackling the looming threat of the skills shortage in an industry facing a relentless demand for skills that may not be in adequate supply for years to come.
Public sector purchasing stands to gain the most from data-driven procurement, and so far has done the least.
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Data-driven analytics have the potential to empower CPOs with greater understanding of their ecosystems, value chains, and internal operations. Big data can shine a light on places where there’s room to create efficiencies, contain costs, and mitigate risk.
In the June 2023 issue of Government Procurement, Steve Isaac notes that analytics can create significant benefits in areas like negotiation, vendor segmentation and yearly planning. He goes on to note, however, that “advanced analytics and data science haven’t exactly broken into the public procurement zeitgeist. It isn’t the subject of keynotes at the annual conferences and meetings … It isn’t a qualification line on most procurement job listings. For most agencies—even large ones—introducing advanced data science is not a priority.”
It’s not altogether shocking that, while the private sector is investing heavily in the potential benefits of data analytics and other digital procurement tools—with the global procurement software industry predicted to exhibit a CAGR of over 10% between now and 2032—public sector procurement lags behind. Isaac notes that it’s a “chicken and egg” issue with the case for a robust data science function hinging on the benefits of that investment being understood, which requires them to be felt, which can’t happen until investment, but… and so on.
However, there’s a case to be made that this delay in data science investment by public sector procurement agencies is one of the critical stumbling blocks also preventing public sector procurement from adopting artificial intelligence, machine learning, and other cutting-edge technology with the potential to solve a lot of the recurring public sector pain points.
Raimundo Martinez, Global Digital Solutions Manager of Procurement and Supply Chain at bp, noted in a recent interview with the MIT Technology Review that “everybody talks about AI, ML, and all these tools, but to be honest with you, I think your journey really starts a little bit earlier. I think when we go out and think about this advanced technology, which obviously, have their place, I think in the beginning, what you really need to focus on is your foundational [layer], and that is your data.” Martinez stresses the importance of building a strong data foundation that allows CPOs to take advantage of emerging technologies in their supply chains.
It’s not as though public procurement departments are short on data either. Isaac argues that, “if data is a precious resource, governments are gold mines.” Governments collect huge amounts of information all the time. The widespread adoption of digital ERP systems, eProcurement, supply chain management software and vendor performance sites is now doing a great job of mining that data.
As noted in a report by researchers from the Government Transparency Institute, a European think tank, “The digitalisation of national public procurement systems across the world has opened enormous opportunities to measure and analyse procurement data. The use of data analytics on public procurement data allows governments to strategically monitor procurement markets and trends, to improve the procurement and contracting process through data-driven policy making, and to assess the potential trade-offs of distinct procurement strategies or reforms.”
From compliance to being an efficiency driver, there are more benefits to sustainable procurement practices than environmental ones.
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The main obstacle cited by procurement leaders (as well as those outside the procurement and supply chain functions) to adopting sustainable procurement practices is cost.
According to Edie’s “The Business Guide to Sustainable and Circular Procurement” report released in November 2023, “Costs and Finances” was considered one of the biggest barriers to “Improving Sustainable Procurement For Your Operation”. In a survey of procurement leaders, 76% considered cost to be one of the biggest issues, compared to the distant second and third options: “Lack of Data” (54%) and “Lack of Understanding on Sustainability (38%).
However, in addition to the fact that the benefits of collective climate action dramatically outweigh its short term costs (existential threats are like that), there are sound arguments to be made for sustainable procurement practices from a business point of view as well.
The sustainability benefits incurred by reducing environmental impact in the supply chain can, according to the Edie report, be a catalyst that helps respond to a plethora of issues and considerations.”
Closing the loop to create a more circular supply chain can be driven from within the procurement function, and can do a lot to protect the S2P process from pricing volatility and supply chain disruption—something increasingly on the mind of industry leaders, as indicated by Dun & Bradstreet’s Q1 2024 Global Business Optimism Insights report, which highlighted “a downturn in global supply chain continuity due to geopolitical tensions, trade disputes, and climate-related disruptions in maritime trade causing both higher delivery costs and delayed delivery times.”
There is also the fact that meaningful adoption of sustainable practice in the S2P value chain can have a meaningful financial benefit to brands as a whole. Sustainability is an issue on which consumers vote with their wallets. According to the World Economic Forum, “sustainable procurement practices can help deliver a 15-30% increase in measurable brand equity and value”. Consumers, suppliers, and partners all value sustainable practice as a meaningful demonstration of company quality, and—especially in terms of public opinion—consumers are becoming savvier when it comes to differentiating meaningful change from empty rhetoric.
There’s more economic benefit than brand value adjustment that comes along with reexamining procurement practices from a sustainability perspective. The same report by the WEF noted that “embedding sustainability into procurement practices can actually help reduce departmental costs for procurement by 9-16%.” Evaluating processes for the sake of exploring green options often exposes existing inefficiencies, siloes and poor planning that can then be rectified rather than being left unexamined.
While business leaders continue to shy away from perceived profit loss as a result of pursuing more sustainable practice in their procurement functions, when handled correctly, it can be a source of more than just emissions wins.
As procurement becomes more important, digitally-driven, and strategic, so has the role of the Chief Procurement Officer.
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15 years ago, the Chief Technology Officer role rarely appeared on a roll call of the C-suite outside Silicon Valley. If you weren’t a tech company, you had a “head of IT” or even just an “IT guy”. Now, “every company is a technology company”, and every boardroom has a CTO. (And a Chief Information Officer, and a Chief Security Officer, and probable a Chief Digital Transformation Officer, and so on).
As technology has changed the way that we do business at a near-molecular level, so too has it changed the roles of the leaders overseeing it. No longer can you have someone in your C-suite who is technologically illiterate, just like you can no longer be a tech genius without at least a little flair for business. As the role has become more integral, it has become more strategic, and the demands placed upon executives and employees have changed.
That’s all ancient history, but history repeats itself. The same thing is happening to procurement right now.
In the last several years, the procurement function has started to show genuine signs of transformation from what David Ingram, CPO for Unilever, calls a “insular, contract-and-process-heavy organisation to a wider, more insightful function that is connected to what is happening in the broader market.”
Hervé Le Faou, CPO at Heineken, goes further, stating that “Fundamentally, the CPO is evolving into a ‘chief value officer,’ a partner and co-leader to the CEO who is able to generate value through business partnering, digital and technology, and sustainability, which are new sources of profitable growth in a shift toward a future-proof business model.”
A white paper from AI procurement company Zycus points out that the role of CPO has grown to include new duties, and preexisting duties have become more important in an increasingly fast-moving, easily-disrupted business landscape. “Today, CPOs are responsible for compliance. They play an active role in merger & acquisitions and participate in strategic initiatives. This is in addition to handling supply risk management, environmental responsibility, as well as the traditional job of ensuring cost-efficiency,” the report’s authors note. “Hence, it comes as no surprise that some companies have started inducting CPOs into the board of directors. In many others, the employee- hierarchies are undergoing a change, with procurement function reporting directly into the C-level executives or the board. The CPOs of today enjoy greater autonomy and improved control over budgets than before.”
As a result, the role of CPO has transformed from a tactical, functional one to something broader, more strategic, and typically more autonomous.
Risk management has risen (almost) to the top of CPOs’ priority list for 2024. Here’s how they’re tackling it.
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If ever the world truly reached a state of “new normal”, that state is one of constant disruption.
Even by the time the COVID-19 pandemic threw the world’s supply chains into a state of utter turmoil in March of 2020, procurement teams were already dealing with a heightened state of disruption. The US-China trade war that defined most of 2019 had barely simmered down before most of Australia was on fire and a US drone strike killed Qasem Soleimani which made an escalating war with Iran look like a very real possibility. Lockdowns, protests, earthquakes, war in Ukraine, spiking oil prices, genocide in Palestine, and both the accidental and purposeful disruption of shipping through the Gulf are just a smattering of the disruptions to which procurement professionals are becoming accustomed.
“After the last few tumultuous years, procurement teams are still facing steep challenges in getting ahead of supplier and supply chain risks,” writes Greg Holt, Product Marketing Director at Interos. “Unfortunately, there are no signs that the heightened frequency of disruptions we’ve seen over the last few years will abate in 2024.”
It’s clear that the procurement teams that learn to manage risk on a daily basis will be the ones that fare best in a world increasingly defined by geopolitical instability and a collapsing climate.
Procurement risk management strategies
Risk management is not a one-time process, nor a single overhaul of policy; managing risk requires constant oversight and frequent reevaluation to ensure you avoid disruption today and are ready for problems that will arise tomorrow.
Streamline your data, break your silos
Procurement departments are often repositories of some of the best risk management data in the whole organisation, gathering large amounts of information on suppliers and other external factors. Procurement departments that take a more purposeful approach to their risk data can quickly establish themselves as repositories of “data, assessments, monitoring and alerts,” becoming “trusted partners who can maintain the risk intelligence needed to support the business with insights, trends and a common view of the risks posed across the extended supplier ecosystem.”
Automate away human error
While there is no shortage of questions when it comes to applying automation to complex tasks (not to mention new pain points and sources of risk), correctly implementing automation can create immediate benefits when used to take repetitive, resource intensive tasks out of human hands. Repetitive, menial tasks are common in procurement systems, and are the most prone to human error. Automation tools can reduce errors and free up time for procurement workers.
Use digital transformation to diversify your supplier ecosystem
There’s a limit to the amount of decision making and supplier diversification achieved by human means. There’s simply too much decision making to be juggled. However, with the help of AI, procurement departments can diversify and adjust their supplier ecosystem much more effectively and to a greater degree. For example, the South Korean government has adopted AI-powered decision making to nearshore a significant portion of its procurement spend. Now, 75.6% of the government’s total procurement spend is now awarded to SMEs through the evolution of its AI platform.
Interest and investment in generative AI has been massive, but does the technology actually have the capacity to meaningfully change the procurement industry?
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Since the arrival of large language model-powered chatbots, like OpenAI’s ChatGPT, the corporate landscape has been frantically striving to invest in and adopt generative AI.
Executives floated (I mean salivated over) the possibility that generative AI could replace a staggering number of roles throughout virtually every sector from law to content creation and entertainment. Well, just look how well that turned out. The legal backlash has, in many cases, been severe and, just over six months into the generative AI hype cycle, cracks are beginning to show.
But what about the applications? Surely all these issues and all this money is going into generative AI technology for a reason, right? Surely we all learned our lesson from the Metaverse, the crypto bubble, NFTs, and streaming and… I guess we didn’t, did we?
Well, actually, there are a few, but they won’t look like the Wild West of content generation we’ve seen so far.
In the retail sector, for example, 98% of companies plan on investing in generative AI in the next 18 months, according to a new survey conducted by NVIDIA (a company with an admittedly vested interest in selling shiny new GPUs). Early examples of adoption in the sector have included personalised shopping advisors and adaptive advertising, with retailers initially testing off-the-shelf models like GPT-4 from OpenAI.
However, many retailers are recognising that the strength (and weakness) of generative AI is that you only get out what you put in. That’s why the technology is, ultimately, useless as a way to replace creative roles like writers and artists. However, as a brand communicator meticulously trained on a specific set of data with carefully updated parameters, it could be invaluable. NVIDIA’s report notes that “many are now realising the value in developing custom models trained on their proprietary data to achieve brand-appropriate tone and personalised results in a scalable, cost-effective way.”
Generative AI trained on a company’s internal and customer-facing databases, web presence, and curated information resources could conversationally recommend, educate, and explain critical information to employees, customers, and business partners effectively and consistently. In an industry where communication relies on clarity and an understanding of large quantities of information, like procurement, the applications suddenly start to look a lot more appealing.
Chatbots and negotiation bots trained to converse with suppliers, programmed with company approved negotiation tactics and the latest pricing information, could automate a great deal of complexity out of the Source to Pay process.
I think the looming issue is the impact of generative AI adoption on a company’s Scope 3 emissions, as 2024 will unquestionably be defined by greater scrutiny on these sources of pollution. However, it seems that however many issues the more widely known aspects of generative AI have, the technology itself could still have a role within the procurement function of the near future.
Does it justify all the investment, hype, and endless industry media thinkpieces? I guess only time will tell.
An overabundance of digital solutions and a dearth of trust in procurement data presents a unique challenge for CPOs.
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The digitalisation of the procurement sector is well underway, with the global procurement software market set to grow by $11 billion over the next decade, with demand for cloud-based procurement solutions and automated and efficient procurement processes driving this revenue growth.
Procurement efficiency drive
However, a proliferation of digital tools across the procurement landscape points to the growing danger of inefficiency and lack of clarity when it comes to CPOs’ digital transformation strategies. A report by procurement software vendor Productiv found that “procurement and IT are being inundated with software access, vendor intake and renewal requests,” leading to a 32% uptick in the number of SaaS apps procurement departments are running, and a steadily growing workload for purchasing departments as they manage, on average, 700 vendors across various indirect procurement categories.
“This patchwork of tools across various steps of the vendor management lifecycle has created technology, team and data silos,” notes Aashish Chandarana, Chief Information Officer, Productiv. “Instead of increasing efficiency, these tech stacks start adding up to a lot of manual work to bring everything together.” The result is less time and less data to support generating meaningful insights to drive the necessary efficiencies that procurement needs to start producing for the business.
Frequently, it also seems, procurement spends so much time managing sprawling, disconnected tech stacks, that it doesn’t have the time to ensure its data is trustworthy either. A SpendHQ report found last year that “79% of non-procurement executives express limited confidence, or none at all, in utilising procurement’s data for making strategic decisions.” CPOs might recognise the critical nature of accurate data in driving decisions, but so far it seems as though the industry is struggling to ensure the accuracy and reliability of procurement data throughout the wider organisation.
Big Data potential
The potential of big data, effectively harnessed, is tremendous in the procurement process—potentially creating true visibility in otherwise murky or completely opaque value chains, highlighting opportunities for cost containment and efficiency, and helping flag risk factors that could preempt disruption.
Organisations looking to maximise the potential applications of data within their organisations need to be simultaneously mindful of the need for a decluttered tech stack and verifiable, trustworthy data if they are to avoid the pitfalls currently affecting the sector.
Costas Xyloyiannis, CEO of HICX, discusses why it’s time for leaders to take a fresh view of the data problem, and plan to reduce emissions.
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The start of the year is a good time for business leaders to consider their progress against net zero commitments. It also nudges us nearer to carbon-cutting milestones, the nearest of which is in 2030. By this time, businesses across the globe need to have halved their carbon emissions. So, if they haven’t already, now is the time to step up delivery.
But first, there’s a barrier to overcome. Behind every credible net zero win, is credible carbon data. The problem is it’s in very low supply. Good data relies on good emissions information from suppliers, and securing it is notoriously difficult.
As 2024 gets off to a start, it’s time for leaders to take a fresh view of the data problem, and plan to notably reduce emissions. To enable net zero success, we can assess supplier relations in three areas: the power play, digital processes, and a principle that works tremendously well in marketing.
Suppliers are in the power seat
Gone are the days when suppliers view their role as subservient. If the Covid-19 pandemic showed business leaders anything it’s just how much they depend on suppliers – and not just a strategically relevant few. In 2020, we saw non-strategic suppliers, such as PPE and IT providers, become crucial to operations overnight. Since then, businesses have continued to need a broader range of their supplier networks. When further supply chain disruptions brought continued uncertainty, that dependence deepened. Today, as businesses require increasing amounts of carbon information, the fact that we need suppliers is cemented.
Despite this, how big businesses work with their suppliers is often outdated and counter-productive to their goal of gathering good information.
Digital processes are in the Stone Age
Bringing supplier relations into the 2020s will take some serious shifts. First, it’s time to assess the digital processes for managing suppliers, which frankly are not up to the task. A hybrid setup of old and new technology, often poorly integrated, stops procurement teams and their suppliers from communicating well. It causes other friction too, like logging in and out of multiple tools just to perform simple tasks, a headache for both parties.
Additionally, the various tools are data traps. Every time a supplier uses a tool, it collects and stores their data. Siloed in this way, supplier data can quickly become duplicated and outdated, because it’s difficult to maintain. Unreliable master data is no good at fuelling automated workflows, and so procurement teams get stuck with manual processes.
These clunky manual processes together with the frustrating communication methods are not a recipe for successful relations. Given that businesses lean so heavily upon suppliers to receive data for carbon reporting, it’s fair to say that the approach to supplier relationships must change.
Friction is building
When starting a business relationship, most suppliers don’t sign up for this level of friction. What they expect is to put in their first purchase order, deliver their first product, send their first invoice, and repeat. In a perfect world, they will simply transact and renew.
In practice, however, the relationship is not so simple. Businesses need more from suppliers than just transacting – for one, they need a significant amount of information for compliance and innovation reasons and of course on carbon activity. So, businesses send their suppliers an abundance of information requests.
Suppliers, then, who simply want to transact, must field these requests. Further bugbears such as manual processes, disparate ProcureTech setups and poor communication practices, make it difficult to respond. A recent Supplier Experience survey found that over a third of suppliers are expected to login to 10 or more systems, nearly half struggle to resolve queries with their biggest customers, and 61% find it challenging to do their best work. Yet, while suppliers don’t find the situation productive, it continues. Why? Because businesses need their carbon information.
Suppliers want a partnership
An important consideration is that suppliers have agency. When they have limited stock or an idea, they can choose who gets it. When it comes to making the effort to dig up vital carbon information they have a choice. This isn’t to say that suppliers purposefully hold information back. This would be unlikely because they too want the relationship to work. But when they are swamped trying to fulfil their original mandates whilst figuring out complex tech and deciphering information requests, the little time and energy they do have to provide information might well go to a customer-of-choice.
It’s no different in the consumer world, where shoppers decide which brands to buy from. Businesses can’t force consumers to buy from them, so marketing teams get involved and work their magic. They encourage people to spend their hard-earned, limited money on products which they may or may not need, by showing them value, often in the form of an emotional appeal.
Similarly, businesses can’t force suppliers to spend their limited time giving carbon information. But they can sweeten the experience. There’s an opportunity, therefore, for Procurement teams who manage suppliers to change things up. Rather than bombarding suppliers with information requests that they will struggle to fulfil, they can borrow the principle of ‘encouragement’ from Marketing. Procurement can show value to suppliers, according to what’s important to them, with the view to receive value in return.
So, as we start a new year, business leaders can take a fresh perspective on how suppliers are engaged. By understanding the dependence on suppliers, this relationship can be improved. Ultimately, by viewing suppliers as partners, simplifying digital processes and “marketing” to them, business leaders can lay the groundwork for net zero.
Luke Abbott, Co-Founder and CEO at Equipoise, discusses the art of accelerating sustainable procurement with artificial intelligence.
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In today’s rapidly evolving business landscape, sustainability is not just a buzzword; it’s a necessity. As organisations strive to reduce their environmental footprint and drive social improvements in their supply chains, sustainable procurement emerges as a pivotal strategy. With the advent of artificial intelligence (AI), the potential to revolutionise sustainable procurement practices has never been more promising.
Understanding sustainable procurement
Sustainable procurement is the integration of environmental, social, and economic considerations into procurement decisions, to reduce adverse impacts upon society, the economy, and the environment1. As businesses grapple with the repercussions of climate change, dwindling resources, and increasing stakeholder demands, sustainable procurement offers a pathway to not only mitigate risks but also seize new opportunities.
The AI advantage in sustainable procurement
AI, with its ability to process vast amounts of data, automate tasks, and identify intricate patterns, is poised to be a game-changer for sustainable procurement. By leveraging AI, organisations can:
Enhance sustainability data collection
Scope 3 is the hottest topic in sustainable procurement and many organisations are grappling with the question of how to measure the greenhouse gas emissions of their suppliers. Understanding this, especially beyond the first tier, requires extensive data collection. If you were to focus on your top 100 suppliers and ask your tier n-1 suppliers to do the same, when you get to tier 3 (which is probably nowhere near the end of the supply chain) you need to engage a staggering one million companies. At this point, manual data collection and analysis is out of the question for time-strapped organisations. AI tools, such as Avarni2, streamline this process, ensuring comprehensive and accurate data acquisition.
Predictive analytics for sustainability risk management
Managing sustainability risks in today’s intricate global supply chains presents challenges such as monitoring vast supplier networks, handling overwhelming sustainability data and rapidly adapting to sanctions, media reports and regulations, all while maintaining a pristine reputation. AI offers a solution by providing real-time monitoring of supply chains, predictive analysis of potential disruptions, seamless data integration for a comprehensive view, automated reporting for enhanced transparency, and scenario analysis for strategic planning. AI tools, like Versed AI3, continuously monitor vast amounts of supply chain data, ensuring real-time tracking of sustainability factors. This real-time monitoring allows companies to identify potential risks before they escalate, enabling procurement teams to proactively address disruptions and uphold sustainability standards.
Automation
According to Deloitte’s 2023 Global Chief Procurement Officer Survey4, over 70% of CPOs have seen an increase in procurement-related risks, and only a quarter feel equipped to predict supply disruptions timely. Furthermore, internal challenges like talent loss and organisational complexities add to the burden. By automating routine tasks, AI not only alleviates these pressures but also empowers procurement professionals to focus on high-value initiatives, such as supplier education on sustainability priorities. Generative AI tools like ChatGPT can expedite market research, strategy formulation, and contracting processes, allowing teams to be more agile and responsive in this volatile environment.
AI in action
Unilever’s Sustainable Living Plan5 has been at the forefront of leveraging AI to drive innovation in sustainable procurement. In 2023, Unilever highlighted how they have been using AI and digital technologies, from the launch of their first digital tool to the recent formulation of the world’s first green carbon detergent6.
“We’re using AI to help identify alternative ingredients that can strengthen the resilience of our supply chain, making our formulations more sustainable and cost-efficient, and simplifying them by reducing the number of ingredients without impacting a product’s quality or effectiveness.” – Alberto Prado, Unilever R&D’s Head of Digital & Partnerships.
Through a data-driven approach, Unilever has been making smarter, faster, and sharper decisions to optimise its portfolio of brands and products. Their commitment to sustainability is further emphasised by their ambitious goals, which include climate action to achieve net zero, reducing plastic usage, regenerating agriculture, and raising living standards within their value chain7.
Limitations and due diligence
While AI offers transformative potential, it’s crucial to recognise its limitations. The accuracy of AI predictions and recommendations hinges on the quality of data fed into the system. In the realm of sustainable procurement, this means ensuring that the data sources are reliable and comprehensive. Regular audits, cross-referencing with trusted databases, and continuous training of AI models are essential to maintain the integrity of AI-driven insights.
The 2023 Gartner Hype Cycle for artificial intelligence8 underscores the significance of addressing the limitations and risks of fallible AI systems. It emphasises the need for AI strategies to consider which innovations offer the most credible cases for investment, ensuring that AI’s transformative benefits are realised while mitigating potential pitfalls.
The future of AI in sustainable procurement
As we gaze into the future, the synergy between AI and sustainable procurement is poised to grow stronger. With advancements in machine learning algorithms, natural language processing, and predictive analytics, AI’s potential to drive sustainability will only amplify. The Gartner report highlights the rise of generative AI, which is reshaping business processes and redefining the value of human resources. Such innovations, including generative AI and decision intelligence, are expected to offer significant competitive advantages and address challenges associated with integrating AI models into business processes.
However, a conservative outlook suggests that while AI will be a significant enabler, the onus remains on organisations to embed sustainability into their ethos and operations.
In conclusion, as the business landscape becomes increasingly complex, the fusion of AI and sustainable procurement offers a beacon of hope. By harnessing the power of AI, organisations can not only navigate the challenges of today but also pave the way for a sustainable and prosperous future.
From cost-containment to carbon emissions, here are the 10 things that should be top of mind for every chief procurement officer in 2024.
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In the year to come, procurement will continue to transition from a back office function to a boardroom value-driver. Chief Procurement Officers and other leaders will need to increasingly reevaluate their relationships to the rest of the business as procurement not only becomes an increasingly vital source of business wins, but also a central piece of the puzzle when it comes to emissions reduction and resilience throughout the supply chain.
From generative AI to the skills shortage, there’s a lot that CPOs could be focusing on in the year ahead. We’re kicking off the new year with our list of the top ten things CPOs should be prioritising in 2024.
1. Drive significant value for the business
That’s why the first priority of all CPOs in 2024 is to apply technology, new operational organisation, hiring practices, sustainable strategy, cost containment, and every other trick and technique in order to create value for the business. Increasingly, CPOs are transitioning from logistical and cost-cutting functionaries to “orchestrators of value” and that will only become more apparent as the year (and decade) wears on.
2. Drive digital transformation
As mentioned before, procurement is a process that’s reinventing itself before our very eyes, embracing new digital technologies and ways of working that increase efficiency and drive value for the business. CPOs are increasingly important integrators of technology into the business, and should all be prioritising ways to implement technology over the coming year. However, it’s important to beware that technology for technology’s sake is even more dangerous than sticking it out with a legacy system…
3. Reduce environmental impact
Knowing may be half the battle, but once CPOs have an understanding of the environmental impact their S2P process has, they must prioritise finding ways to mitigate that impact. From a stricter regulatory landscape to a more perceptive and angry public, a meaningful environmental sustainability strategy is no longer “nice to have” or even necessary: it’s long overdue.
4. Understand your Scope 3 emissions
More than 60% of procurement leaders in the US, UK, and Europe surveyed in a recent report say that their Scope 3 emissions reporting process is more of a “take your best-guess” approach than a process of gathering concrete, reliable information.
The S2P process is one of, if not the, biggest source of greenhouse gas emissions for every company on earth, and understanding the consequences of working with one supplier or another (and then accurately reporting that information) is a huge part of the journey to net zero. CPOs who fail to prioritise transparency in their S2P process will find themselves actively hindering their organisations’ environmental ambitions at a time when procurement has the potential to be the biggest driver of positive environmental impact in many organisations.
5. Cultivate your supplier ecosystem
As much as technology is playing a bigger and bigger role in the procurement process, no CPO should discount the importance of building genuine, strategic relationships within their supplier ecosystem. Obviously, some industries are doing better than others, but in many areas (like the fashion industry, where “Those in charge of contracting suppliers for fashion brands say they are investing in longer-term strategic partnerships,” but their suppliers “tell a different story”) there’s still need for improvement.
6. Don’t buy into the hype (too soon)
In 2021, it was self-driving cars. In 2022 it was the metaverse. And last year saw the world get absolutely bent out of shape over the promise of generative artificial intelligence. However, much like NFTs and blockchain (another thing everyone was spending a lot of money trying to figure out how to make money from for a while), the promised trillions of dollars of economic impact from these technologies has yet to translate into meaningful business applications. Even the hyperloop was abandoned this year.
Procurement is an area with a huge amount of potential for digital transformation, and adopting the right technologies for the right reasons is what’s going to separate industry-defining success stories from all those dudes who went blind at the Bored Ape Yacht Club convention.
7. Mitigate risk to the supply chain
In the wake of the COVID-19 pandemic, the global source to pay (S2P) process has transitioned from a “just in time” approach to a “just in case” one. As climate change disrupts agriculture and manufacturing across the global south, and events like the Yemeni blockade of the Suez canal in order to hinder Israel’s occupation of Palestine hinder the movement of goods between regions, CPOs should prioritise diverse buying strategies that mitigate risk to their S2P processes.
8. Be a source of cost-containment
Inflation was a defining characteristic of the economy in 2023, as corporate price gouging (amid other factors) caused cost-of-living to spike. In a world of rising prices, and supply chain unpredictability, controlling costs will fall increasingly to CPOs in 2024. Cost reduction targets have been hit less consistently across the industry in the last few years, thanks largely to inflation and the pandemic’s disruption of global supply chains. Going into the year ahead, CPOs who can find a way to successfully meet their cost containment targets will find themselves with a serious leg up over their competition.
9. Don’t lose existing talent
The world is in the midst of a growing resurgence in the power of labour, as class consciousness and anti-capitalist sentiment rise. The old propaganda about loyalty to companies that would replace that employee in a heartbeat doesn’t work anymore, and workers are increasingly understanding (and demanding) their true worth, and it sent shockwaves through the service, autoworker, and entertainment industries in the US last year alone.
With the tech sector still leading the world in brutal mass Q4 firing and rehiring strategies, and labour movements within massive logistics firms like Amazon growing stronger by the day, 2024 promises to be defined by more strikes and other examples of direct action, not less. CPOs in the middle of a talent shortage should prioritise giving their employees reasons to stay beyond gym memberships and company pizza parties.
10. Hire top talent
The nature of procurement is changing. As the discipline becomes increasingly digitalised, not to mention plays a more strategic role within the modern enterprise as a whole, the skills that make for a good procurement professional aren’t the same skills that were on job listings ten, or even five, years ago.
In 2024, CPOs should constantly reevaluate the skills necessary not only to do the job now, but to tackle the procurement challenges of the next few years when hiring.
In our new feature, Shaz Khan takes us through a day in his life leading operations as CEO at Vroozi.
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The procurement industry is on the cusp of a golden age. The quality and breadth of software that we will have at our disposal will be able to solve pain points in ways we have never seen before. As CEO of Vroozi, every day is spent with the mission of trying to spearhead these innovations in sourcing and procurement tech forward. However, in order to keep a proper work-life balance and not burn the candle at both ends, I have to ensure that my days are organised in such a way that I can maximise productivity while leaving enough room to let my mind and body recharge.
My mornings typically look the same. I wake up every day at 6am and I spend the hour either checking emails or getting on phone calls with partners and clients who are located in different time zones. My wife and I love a great cup of coffee and she brews a mean French press every morning which I happily imbibe as we prep to take our youngest child to school.
After morning drop off, I always do some type of workout from 8am to 9am, a quick morning hike, weight training, or some type of cross-fit routine. Physical activity is important to me and I like to get my blood pumping first thing in the morning. I am based in Los Angeles and I love to take advantage of the favourable climate and conduct my daily morning leadership meetings when possible. We have built a great team and culture at Vroozi and I always want to start the day with complete alignment on our company objectives.
For the rest of the morning, I am involved in a mix of meetings with management, status calls with different departments, and direct sales calls. I try to schedule most of my meetings during these hours so that by 1pm, I can focus on my own work without distraction. I fit lunch somewhere within these time slots depending on when I find an opening, but it ranges from day to day. From 1pm to 4pm, I get to do the work I need to do to review items of importance — from various documents, contracts, or simply just game planning and overall strategy.
As a CEO, there are three major areas I am laser focused on. The first area involves evangelising the overall vision of the company, both internally and to the outside market. It is important to set a solid vision and mission statement for your team but also provide clear guidance to the market on your differentiators, value proposition, and capabilities in the simplest of terms. My second responsibility is Chief Recruitment Officer. I want to ensure that I am actively recruiting and building the best team. Of course, a big part of that involves hiring talent from outside the company, but I strongly believe in promoting from within — ensuring there is a proper promotional path for high performers within the company.
The third responsibility has two components: Innovation and Sales. I subscribe to the notion that tech CEOs should spend 50% of their energy innovating on the product and the other 50% driving sales and distribution for the product lines. CEOs need to educate themselves on the products and services that they’re selling and how to sell it. You cannot offload that responsibility to other people. You should immerse yourself in all aspects of the product and influence the roadmap of that product. That’s why it’s critical to be able to support sales efforts directly or indirectly.
After 4pm, I check in with the management team to see if there are any urgent action items or issues that need to be unblocked. I like to spend a portion of my day with core management to ensure we understand organisation goals and that we’re doing what is needed to achieve them. If we see some slips in the process, we’ll address the things we need to do to fill in those cracks. We are a tech company and much of our focus revolves around the pace and quality of innovation with our software platform. Are we responding to customer needs quickly? How quickly are we approving new features on a product roadmap that we feel is meaningful to the company mission? How quickly are we demonstrating value not only to our existing customers but to prospects in our sales cycle? Are we retaining customers and growing with them?
Shaz Khan, CEO, Vroozi
When selling software, customer retention and expansion is critical. We strive to maintain the same level of enthusiasm, service level, innovation and attention for both our long-standing customers and new customers in a consistent manner. The same way you expect a retail chain at a mall to look and feel relatively the same whether you are in Texas or California, we want our services to be consistent and world-class regardless of region and market.
As top management, you should not be the final verdict in every required key decision. You should be able to empower leadership with a framework for decision making and risk management and trust that business is moving in a continuous state of motion. You have brought leaders in for that very purpose—to lead departments, mitigate risk, and execute strategy. However, problem solving is absolutely a necessary part and art for any C-Suite executive. My approach is very action-based. If there is a problem in a department that I see is not getting addressed to the company’s satisfaction, I will actively pull up a chair and sit down with that department to ensure we don’t leave until we outline an approach to solve the issue at hand.
Leaders need to entrust the team that they have gathered around them to solve day to day problems and challenges. But CEOs also need to be active so that problems in the business can be addressed and remediated quickly.
I also draw a line in the sand where I will never go searching for problems to solve. There’s a trust that you build with your executive team to get that work done. Regardless if I’m handling the problem or one of my direct managers is handling it, I believe that if any item will take you less than 10 minutes to complete, get it done immediately. This is how you are able to streamline business operations without letting issues pile up month after month unaddressed.
Once I deal with any important matters at hand with upper management, I’ll take a break and wind down with dinner with the family or coaching my daughter’s league basketball teams. My last shift of the day is around 9pm where I will check in with our international team and partners and customers. I take any calls required from those overseas teams when it comes to product development or sales opportunities.
After 10pm, I make sure to shut down and prepare for the next day. It’s important to set boundaries when you’re off the clock. I don’t subscribe to the philosophy that you have to work all hours of the day to prove your worth. Being CEO will already require plenty of sacrifice and commitment within the title. You have to always be on and there is no real concept of a weekend or a holiday. But that does not mean that we must burn out. I always try to find time to disconnect and decompress, whether with music, art, or physical activities.
The procure-to-pay industry will see some dramatic and fantastic changes in the next couple of years and Vroozi is positioned to not only adapt to these changes but to lead these changes with our AI-based technologies. There will be an increasing proliferation of technologies within the procuretech ecosystem that will augment company resource pools with smart AI-enabled assistants. These advanced tools will streamline purchasing and payment transactions, and foster improved collaboration between buyers and suppliers, ultimately enhancing supply chain operations.
In the next three years, procure-to-pay will emerge as a vital organisational function, not only driving improved operating margins and enhancing productivity through intelligent document processing but also acting as a key catalyst for innovative supply chain developments between suppliers and buyers. This will involve capabilities that will span predictive analytics on pricing trends, supply chain scenario planning, and digital payment alternatives with AI assistants who will recommend the best course of action to take—both within the software technology map, but also with additional solutions beyond it to further strengthen your business case or outcome.
With these changes on the horizon, I anticipate shifts in my day-to-day. Before COVID, I was on the road for half the year, as I firmly believe you have to be physically present whenever possible rather than relying on management via Zoom or other video conference tools. As we continue to expand in 2024, I expect to dedicate more time to travel, engaging directly with customers, partners, and participating in key events.
As I prepare to hit the road this year, my typical day will often look different. However, regardless of my location, my routine will maintain a structured focus on developing the best possible product and getting that product in the hands of as many customers as possible.
CPOstrategy explores this issue’s Big Question and uncovers if now is the greatest time to be in procurement.
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Procurement has a unique opportunity.
Amid unprecedented digital transformation and innovation, it finds itself in a state of flux and momentum. For professionals who like change, procurement is the place for them. The years of procurement standing still are long gone, its position in the c-suite is only becoming increasingly secure and prominent.
As Covid outlined, businesses need flexible and agile supply chains that are equipped to deal with local or global disruption based on macroeconomic factors. This could be an aforementioned pandemic, wars like the ones we’ve seen in Ukraine and Israel in recent years or other external issues such as the Suez Canal disruption or inflation concerns. Procurement’s time is now.
At DPW Amsterdam 2023, the notion that procurement exists in today’s world as an exciting function that spearheads the c-suite. In comedian and host of DPW, Andrew Moskos’, opening welcome, he noted procurement’s transformation and shouted. “Procurement used to be boring but now we’re all rockstars. We run the company, we’re in the c-suite, we run ESG, sustainability, risk and 80% of the spend of a company goes through us.” His message was met with loud applause from a capacity crowd at former stock exchange building Beurs van Berlage.
Michael van Keulen, CPO, Coupa
According to Michael van Keulen, Chief Procurement Officer at Coupa, it’s the feeling of ‘no two days are the same’ which keeps him energised and feeling refreshed about meeting new challenges in the space. “I wear so many different hats every single day,” he explains. “I always say sometimes I’m an accountant, others I’m an environmentalist. Sometimes I’m the treasurer or a finance person, but I’m also sometimes a psychiatrist. Sometimes I’m a doctor, a nurse, a lawyer, a judge, an environmentalist and yes even a wizard.
“I never know what my day looks like. I can plan it, but something may happen where everything goes out the window. Procurement will always be going through some type of disruption. It’s about how you drive the competitive edge and how you drive value despite that. Procurement is the best gig in the world. It’s great that more people have started to see that now too.”
Right now, generative AI is the latest craze causing quite the buzz in procurement. Indeed, its noise is loud with its true influence yet to be determined. But it’s worth remembering generative AI didn’t start with ChatGPT in 2022. Chatbots actually go back to the 1960s. Among the first functioning examples was the ELIZA chatbot which was created in 1961 by British scientist Joseph Weizenbaum. It was the first talking computer program that could communicate with a human through natural language. But, given the introduction of a far more advanced model – ChatGPT – gen AI isn’t just making waves in procurement but across industries globally too.
Daniel Barnes, Community Manager, Gatekeeper
For Daniel Barnes, Community Manager at Gatekeeper, the stakes are high. As a self-confessed change agent, he believes procurement stands at a make-or-break moment. “You’ve got people who are stuck in the past that are archaic with what they’re doing. Then there’s those who are really pushing the profession forward,” he explains. “I see it as a moment in time where procurement kind of goes one in two ways. It’s extinct in terms of how it used to be. There’s solutions which have automated workflows and are doing the work that traditional procurement people used to do. We can pull people along, but there has to be a willingness to change or it’s not going to happen. That’s why I think it’s great to see people that are showing that willingness. They may not have the answers, but they want to learn.”
Alan Holland, CEO, Keelvar
According to Alan Holland, CEO of Keelvar, he is bullish and optimistic about procurement’s future, stressing that decision-making for the function is easier than ever before. Holland affirms tomorrow is “very bright” as procurement enters an era with intelligent software agents that can automate workflows and make the human workday more efficient. “There’s a whole new range of possibilities where creative and thoughtful planning will provide a competitive advantage for organisations. Procurement can be far more influential in how successful their companies can be. It’s a game-changer.”
Scott Mars, Global V
Scott Mars, Global Vice President of Sales at Pactum, affirms procurement’s in its golden age given the number of vendors operating within the procuretech ecosystem has hit soaring heights. He tells us, “I was speaking with a CPO recently and he said 10 years ago you could name the procure to pay and ERP vendors on one hand, now there’s hundreds of them and all these periphery vendors for AI and spend. The most visionary procurement leaders aren’t just looking at these all-encompassing solutions, they’re bolting on niche solutions into their ecosystems to make their teams more efficient. I think we’ll start to see a consolidation in the coming years of all these little companies into a few larger players to do really an end-to-end type solution. I expect someone to come up with a solution to close the loop in procurement.”
Stefan Dent, Co-Founder, Simfoni
While procurement, like many industries, is still plagued by talent shortages, there is hope that AI could hold the answer. But while its influence is crucial in one hand, is there a risk that the industry could go too far the other way and become over reliant on technology? Stefan Dent, Co-Founder at Simfoni, believes soon Chief Procurement Officers will soon be thinking differently about their workforce. “This is arguably the best time for people to join procurement, as you’ve got this great opportunity to embrace digital and make it happen. Young people can question ‘Well, why can’t it be done by a machine?’ They’re coming in with that mindset, as opposed to fighting being replaced. I think for graduates coming into procurement, they’ve got the opportunity to play with digital which is a wonderful thing.”
Matthias Gutzmann, Founder, DPW Amsterdam
Today, procurement, and its professionals, find itself amid meteoric change. Indeed, its future could be anything. Matthias Gutzmann, Founder of DPW Amsterdam, believes it is time for procurement to create a buzz about the profession. “It’s the best time to be in procurement,” he explains. “It’s the most exciting era to be in procurement and supply chain. We need to get loud about it and celebrate that fact.”
Timothy Woodcock, Director of Procurement at CordenPharma, discusses the new wave of change following acquisition and amid transformation
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We have a bumper issue of fascinating exclusives this month!
Corden Pharma: Powering Change
Timothy Woodcock, Director of Procurement at CordenPharma, discusses the new wave of change following acquisition and amid transformation
Change is here, get busy. Indeed, some organisations are further along a transformation journey than others. For CordenPharma, a Contract Development and Manufacturing Organisation (CDMO) partner, they are right on track.
CordenPharma supports biotech and pharma innovators of complex modalities in the advancement of their drug development lifecycle. Harnessing the collective expertise of the teams across its globally integrated facility network, CordenPharma provides bespoke outsourcing services spanning the complete supply chain, from early clinical-phase development to commercialisation. Recognised as a key partner to the pharma industry, CordenPharma provides state-of-the-art know-how, an integrated product offering end-to-end capabilities from early-stage development to commercial large-scale manufacturing.
A closer look
Timothy Woodcock has been the Director of Procurement at CordenPharma since October 2022 and is based in Basel, Switzerland. He explains that since joining over a year ago, while it was a “good start”, he admits to discovering some surprises after closer inspection. “There was a lot of information to get to grips with at the start and it was spread wide and thin,” he tells us. “But the team is certainly key and they have helped me pull it together through solid collaboration and engagement. Of course, there were a few surprises in the process realm, but that’s what makes this challenge so interesting to me.”
carbmee: Carbon management for complex supply chains
Prof. Dr. Christian Heinrich, Co-Founder at carbmee, discusses his organisation’s journey to being the trusted solution provider for carbon management.
carbmee means carbon excellence for complex supply chains. It is the carbon management solution for automotive, manufacturing, chemical, pharmaceuticals, medtech, hi-tech, logistics, and FMCG industries. Whether to assess emissions holistically throughout the entire company, product or suppliers, carbmee EIS™ platform can create the transparency required for uncovering optimal emissions reduction potential and at the same time, stay compliant with upcoming regulations like CBAM.
carbmee’s journey
Christian Heinrich has been the Co-Founder at the organisation since January 2021. While some executives end up in procurement and supply chain by mistake, for Heinrich he affirms it was “always” the industry for him. As far as he’s concerned, collaboration is a big piece of the puzzle and Heinrich points to his diverse experience in a range of different industries and sectors which have helped him along the way to forming carbmee.
“This was actually one of the reasons my co-founder Robin Spickers asked me to leverage my supply chain knowledge,” he says. “Robin had expertise in sustainability areas like Product LifeCycle Assessments and I had that in procurement and supply chain. We connected together and created carbmee to have scope 1, 2 and 3 solutions for carbon accounting and carbon reduction, which also combines the lifecycle analysis.”
Zorana Subasic, Director SEERU & PSCoE Cluster Procurement at Hemofarm A.D. reveals how a glocal approach is transforming procurement at the pharmaceutical…
Zorana Subasic is all about people. She heads up procurement for Hemofarm, the largest Serbian exporter of medicinal products, with a share of more than 70% of the total pharmaceutical. It sells pharmaceutical products on four continents in 34 states and, since 2006, has been part of the multi-national pharmaceutical giant STADA Group.
Meeting the challenges
Zorana explains that her priority is focusing on people, both within her team and in the wider company, a priority that has been even more important during the last few challenging years and has impacted her leadership style. ”These are areas that were new for me – managing people in ‘business as usual’ times is completely different to what we’ve been through in the last two or three years. It has affected people, and how it was for me to manage people in difficult times – understanding the challenges around us and making sure that people also understand the challenges.”
Onur Dogay, CPO at Elon Group, reflects on a year of procurement evolution and making the function an indispensable partner to the organisation…
A lot can happen in a year. Just ask Onur Dogay. In late summer 2022 he arrived in Sweden from his native Turkey to take the helm of a complex and evolving procurement environment at Elon Group AB, the Nordic region’s leading voluntary trade chain for home and electronic products. That he joined just a month after a significant merger that cemented the company’s market-leading position was no coincidence. Rather, Dogay was brought on board with a specific mission: use his industry experience and passion for transforming procurement to sustain the company’s market status while spearheading growth in new areas of retail and electronics.
And he hasn’t slowed down since. In little over 12 months, Dogay has overseen a procurement evolution that includes setting a new data strategy that’s aligned with the broader company vision, shifting procurement’s role to be less transactional and more of a strategic business partner, improving communication and partnerships both internally and externally with suppliers, and overseeing the greater use of data and technology to enhance forecasting and planning capabilities.
A seasoned procurement professional
A glance at Dogay’s CV to date leaves little surprise at his success. He is a seasoned procurement professional, with more than 20 years’ experience in procurement leadership positions working across internationally dispersed teams in Europe. “My background is particularly strong in retail, consumer electronics, telecom, and IT business units,” he explains, “including at Arcelik, one of the world’s largest manufacturing companies, and also for one of the biggest retailers in Europe, MediaMarkt. At the time of the merger in 2022 here at Elon Group, this experience, as well as the good relationships I had with many of the suppliers and brands we work with now, was the perfect match for the company.”
Microsoft: A sustainable supply chain transformation
In the past four years, Microsoft has gained more than 80,000 productivity hours and avoided hundreds of millions in costs. Did you miss that? That’s probably because these massive improvements took place behind the scenes as the technology giant moved to turn SC management into a major force driving efficiencies, enabling growth, and bringing the company closer to its sustainability goals.
An exciting time
Expect changes and outcomes to continue as Dhaval Desai continues to apply the learnings from the Devices Supply Chain transformation – think Xbox, Surface, VR and PC accessories and cross-industry experiences and another to the fast-growing Cloud supply chain where demand for Azure is surging. As the Principal Group Software Engineering Manager, Desai is part of the Supply Chain Engineering organisation, the global team of architects, managers, and engineers in the US, Europe, and India tasked with developing a platform and capabilities to power supply chains across Microsoft. It’s an exciting time. Desai’s staff has already quadrupled since he joined Microsoft in 2021, and it’s still growing. Within the company, he’s on the cutting edge of technology innovation testing generative AI solutions. “We are actively learning how to improve it and move forward,” he tells us.
Data is the key to unlocking new opportunities and managing risk, but capitalising on the opportunities of data in procurement is not without challenges.
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Over the past few years, the procurement sector has been thrust into the limelight, as CPOs are increasingly being identified as drivers of value creation, cost containment, and risk management.
In addition to business and process innovations, a lot of the changes in the role of procurement are due to a wave of digital transformation sweeping the industry. If digital transformation is the engine driving this elevation of the procurement function, then data is the fuel powering it.
Effectively capturing, organising, and utilising data to generate meaningful insights can produce significant benefits for the procurement process. However, costly investment into data analytics, flawed adoption strategies, and oceans of bad data can turn all the potential for wins into a whole new source of risk for the business. This week, we’ve gathered our top 3 challenges CPOs face when incorporating big data into their operations.
1. Bad data
No, I don’t mean Lore from Star Trek: TNG. Bad Data is a fundamental and pervasive risk to procurement professionals looking to empower their analytics. It’s also a far more widespread problem than many executives would like to believe. Last year, a report by SpendHQ found that 75% of procurement professionals doubted the accuracy of their procurement data, leading to almost 80% of executives outside the procurement function lacking confidence when it comes to making decisions based on that data.
In order for it to make any meaningful contribution to reducing costs, mitigating risk, promoting sustainability and driving meaningful change within the business as a whole, the data used by procurement has to be accurate. Pierre Laprée, chief product officer of SpendHQ, noted in the report that “procurement teams must do more to build and maintain influence within their organisations, including removing the dependency on spreadsheets to become more efficient.”
2. Choosing the right technology
Collecting, managing, and drawing insights from your procurement data is a matter of using the right digital tools. However, choosing the right digital tools—especially with CPOs often facing pressure from stakeholders to transform their operations digitally—can be a complicated prospect with potentially severe negative consequences ranging from sub-par outcomes and wasted budgets to catastrophic data breaches.
A report by Productiv found recently that, while “procurement and IT are being inundated with software access, vendor intake and renewal requests,” the number of applications and subscription services being managed by the average business has risen by more than 30% in the past two years. Combined with growing workloads, skill shortages, and an unclear vision for handling these growing technology stacks, Productiv’s report notes that “this patchwork of tools across various steps of the vendor management lifecycle has created technology, team and data silos. Instead of increasing efficiency, these tech stacks start adding up to a lot of manual work to bring everything together.”
3. Creating spend data visibility
Dark purchasing refers to the phenomenon of procurement expenses incurred outside a business’ defined procurement process. It’s uncontrolled spending that procurement can’t see, but that still gets added to their numbers at the end of the quarter.
Big data and procurement is often thought of in terms of its ability to help understand the world outside the business’ walls—logistics, pricing, supplier behaviour throughout the market in response to market changes—but effectively deploying data analytics to understand why dark purchasing is happening, when, and by whom is a vital step in figuring out how to reduce its impact on the company.
Unfortunately, this presents a serious challenge, as many procurement departments lack a cohesive data organisational strategy; data is often scattered throughout multiple silos in the organisation, hidden from procurement in much the same way that unapproved purchasing hides until quarterly expense reports. Overcoming this challenge and creating a holistic, accurate view of company spend—both within the procurement function and outside it—is one of the greatest opportunities and challenges presented by the infusion of big data into procurement.
B2B procurement is headed for a new, more dynamic, digitalised era defined by a more strategic approach to traditional processes and new challenges.
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The procurement industry isn’t a back-office function anymore. Much like the transition of IT departments from obscurity to the C-suite over the past 10-15 years, procurement is making its way into the limelight.
“We are entering a new era of smart business buying where senior leaders are understanding the impact procurement can have on efficiency and overall company success,” said Alexandre Gagnon, vice president of Amazon Business Worldwide, at a recent Amazon Business event attended by more than 1,000 procurement leaders across the public and private sectors.
“The procurement function is now cross-disciplinary, spanning both functional and strategic purviews as buyers are planning to invest more in technology and optimisation while future-proofing their companies and organisations,” added Gagnon.
Procurement’s transition
The 2024 State of Procurement Report released by Amazon Business in conjunction with the event points to an array of indicators that the nature of procurement is fundamentally changing. From the traditional procurement workloads concerned with day-to-day purchasing, to a more recently emerged responsibility of future-proofing the business against disruption (by another pandemic, for example), procurement’s goals are “ever-growing”.
In order to keep up, the discipline is “transforming at lightning speed,” claims Gagnon in the introduction to the report.
Data gathered from over 3,000 procurement professionals supports this inclusion. Key findings include the fact that 95% of decision-makers say their organisation currently has to outsource at least a portion of their procurement to third parties, the fact that 95% of decision-makers say their procurement function has “room for optimisation”, and 53% of respondents who say their procurement budgets will be higher in 2024 than they were this year.
Tech-driven procurement
Technology investment is expected to be high on the agenda, as procurement leaders attempt to bring increased visibility and resilience to their departments. A remarkable 98% of decision makers said they were planning to invest in analytics and insights tools, automation, and AI for their procurement operations, with the (anonymous) VP of purchasing at a major global bank in the US saying that “Making investments in the right tools and technology [is critical] because you rely on data as a procurement organisation. There is … spend data, contractual data, invoices, and more. Without the right tools in place, you can only do so much [with your data].”
Reflecting on the changing role of procurement in the modern enterprise, Gagnon added that “Ultimately, procurement not only keeps operations running, but plays an integral role in achieving key organisational goals, and with smart business buying, companies have procurement solutions to serve as a growth lever for organisations.”
The assistant will use natural language processes and AI to perform “thousands of procurement tasks”.
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The latest in a small flurry of generative AI-powered virtual procurement assistants is hitting the market. Earlier this month, Relish, a B2B app developer based in Ohio, announced the release of its new procurement assistant—a virtual assistant product powered by generative artificial intelligence and designed to intuitively interact with users while performing “thousands of procurement tasks”.
“What we’re offering is a solution that truly frees users from the menial to engage in the meaningful,” said Ryan Walicki, Relish CEO, in a statement to the press. He added that the Relish Procurement Assistant would revolutionise the way businesses handle their procurement systems and processes, claiming: “By leveraging large language models, this single interface spans all procurement systems and platforms and can be custom fit to any enterprise solution ensuring workflows are never interrupted.”
The rise of generative AI
Relish isn’t the first company to utilise a combination of generative AI and large language models, like ChatGPT, to create a more naturalistic interface between users and complex systems for managing data. In November, Californian tech firm Ivalua released an Intelligent Virtual Assistant powered by generative AI as part of its platform, making similar claims that the technology would eliminate busy work, freeing up employees for more strategic activities.
Relish works in a similar way, plugging into an existing procurement management platform, and using artificial intelligence and natural language processing to “intuitively interact” with users in a conversational way, giving them detailed insight into their workflows.
According to Relish, the technology can perform numerous tasks, including supplier management, sourcing, contract management, supply chain, and purchasing.
Where Relish differs from other offerings on the market is in its alleged ability to “[adapt] to any platform and workflow preference.”
According to Jeremy Reeves, Relish Senior Vice President of Product: “The adaptability helps users get the most out of their procurement enterprise software, maximising their return on the investment… It brings a new dimension to how users will go from being taskmasters to being conductors of their enterprise systems.”
Sapio Research found that just 48% of organisations are confident they are accurately reporting Scope 3 emissions through their P2P process.
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More than half of the 850 procurement leaders in the US, UK, and Europe surveyed earlier this year could not claim to be “very confident” in their organisation’s ability to accurately report Scope 3 emissions, according to a new study conducted by Sapio Research and commissioned by Ivalua.
While 48% of leaders were confident in the accuracy of their companies’ reported emissions figures, nearly two-thirds (62%) of leaders surveyed admitted that “reporting on Scope 3 emissions feels like a ‘best-guess’ measurement.”
A significant majority of the organisations were confident that they are on track to meet net zero targets. However, the report also found that many don’t have plans in place for:
Adopting renewable energy (78%).
Reducing carbon emissions (68%).
Adopting circular economy principles (72%).
Reducing air pollution (67%).
Reducing water pollution (63%).
Procurement’s role
It has long been recognised that procurement has a vital role to play in the reduction of environmental impact in organisations’ supply chains, with as much as 90% of a company’s emissions falling within the Scope 3 band.
“Organisations are aware they must urgently address sustainability and understand the cost consequences of not doing so. But this lack of confidence paints a negative picture,” comments Jarrod McAdoo, Director of Sustainable Procurement at Ivalua.
“A lack of perceived progress could fuel accusations and fears of greenwashing, so it’s important to remember that obtaining Scope 3 data is part of the natural maturation process. Many sustainability programs are in their infancy, and organisations need to start somewhere. Estimated data can help determine climate impact and contribute to building realistic, actionable net-zero plans. Over time, organisations will need to make significant progress on obtaining primary Scope 3 data and putting plans in place, or risk financial penalties as well as ruining reputations in the long run.”
Regulatory and public scrutiny continues to mount against both public and private sector polluters. A report released in December highlighted the devastating annual emissions by militaries around the world, finding armed forces to not only be one of the world’s largest fossil fuel consumers (5.5% of all global emissions), but that the US military alone has a larger environmental impact than some developed countries. The scale of military contribution to the climate crisis, in addition to the lack of transparency when it comes to disclosing those figures, is a major issue that is also echoed in the private sector of the civilian world.
Are some companies ‘unintentionally greenwashing?’
In the private sector, both activism and legislation continues to move (too slowly, but it’s a start) against corporations responsible for the climate crisis and pollution. In the UK, the High Court in London ruled that Nigerians affected by oil spills the corporation promised to clean up can bring legal action against the British multinational. The state of California is itself suing America’s largest oil companies for their role in exacerbating and covering up the effects of climate emissions for decades.
More recently, corporations that rank among the world’s largest polluters have been accused of adopting environmentally friendly rhetoric in order to make themselves appear more committed to environmental sustainability than they, in actual fact, are. The practice, known as “greenwashing”, has been criticised by politicians, activists, and members of the scientific community.
McAdoo notes that the inability to accurately report Scope 3 emissions—taking a “best-guess” approach—could be a contributor to organisations looking to avoid unintentionally greenwashing their emissions data by misrepresenting themselves.
“Nearly two-thirds of U.S. organisations agree that an inability to measure supplier emissions accurately makes it hard to turn words into action,” McAdoo continued. “There is a clear need to adopt a smarter approach to procurement. Organisations need granular visibility into their supply chains to ensure they can measure the environmental impact of suppliers but also collaborate with suppliers to develop improvement plans. Only with this transparency can organisations showcase meaningful sustainability progress and avoid accusations of greenwashing.”
Coupa Software and Acquis Consulting Group has released an eBook offering tips on how to navigate the challenges of the procurement landscape.
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A new eBook from Coupa Software and Acquis Consulting Group providing guidance on how to navigate the challenges of the procurement landscape has been released.
The eBook offers real-life success stories from the likes of Dent Wizard, Sun River Healthcare and Eyecare Partners while uncovering essential strategies for enhancing efficiency and driving growth.
Additionally, the eBook provides expert guidance on mastering procurement and compliance in today’s economic landscape as today’s leaders are forced to re-examine their internal processes, particularly when it comes to business spend management.
As a result of rising inflation, as well as the cost of capital and labour, it has meant businesses need to identify new ways to improve margins, drive sustainable growth and scale productivity. However, many existing solutions at mid-market companies are already stretched to the limit.
This led to Dent Wizard, Sun River Healthcare and Eyecare Partners coming to the same conclusion – digital transformation can take painful and antiquated processes and make them stress-free and efficient.
The new eBook is considered a must-read for leaders seeking to overcome the complexities of today’s procurement space amid a challenging economic climate.
To find out more about how Dent Wizard, Sun River Healthcare and Eyecare Partners recommend organisations can transform their business spend management, download Coupa and Acquis’s free eBook here.
AI and Machine Learning-powered analytics could help security teams flag and prevent fraud in their procurement functions.
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Procurement fraud is costly and hard to prevent, but with the right tools, organisations could see red flags earlier and respond in time rather than too late.
According to the Association of Certified Fraud Examiners (CFE), organisations lose 5% of their annual revenue to fraud, with the median loss per case totalling $117,000, and the average being $1.7 million.
Supply chains and procurement functions are especially vulnerable to fraud—often comprising long and winding networks, intricate webs of relationships, vast inventory assets, and multiple transactions along the S2P journey. The procurement and supply chain functions of retailers and manufacturers are especially vulnerable.
Frequently, procurement fraud is the result of a malicious individual within the organisation, although vendors and partners can also be responsible. Bid rigging, intellectual property infringement, inventory theft, and product counterfeiting are all examples of occupational fraud within the procurement process.
To address these challenges, companies must implement proactive measures. The CFE report noted that nearly half of fraud cases occurred due to a lack of internal controls, or an overriding of insufficient existing controls. It also found that anti-fraud controls were effective, resulting in lower losses and quicker fraud detection.
Fraud is prone to thrive in the procurement process, and can have devastating consequences, but the fight against the threat isn’t hopeless, and new technologies are proving especially effective in stamping out the issue.
In addition to traditional anti-fraud measures like strengthening internal controls, performing due diligence, and conducting regular quality checks, organisations can fight fraud in their procurement and supply chain functions by harnessing the power of AI and Big Data.
Fighting fraud with Big Data
AI analytics of Big Data sets can do more than improve efficiencies and predict trends in the movements of goods; these types of analytics excel at pattern recognition and, once correctly trained, can identify subtle changes in activity within the procurement function and supply chain that could point to fraud.
According to Isabelle Adam, an analyst at the Government Transparency Institute in Budapest, and Mihály Fazekas, founder of the Institute and assistant professor in the School of Public Policy at Central European University, “With the increasing use of electronic and online administrative tools — such as e-procurement platforms — making administrative records readily and extensively available in structured databases, public procurement has become a data-rich area.”
This wealth of data, if improperly handled, can become a place for fraud to hide, but if big data analytics are applied, they argue, it “can serve as a tool for auditors to identify and prevent fraud and corruption.”
The top seven trends driving procurement’s transition from the back-office to the boardroom in 2024.
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The year ahead has the potential to be a watershed moment for the procurement industry, as infusions of leading edge technology and process innovation conspire to enable procurement’s shift from spend management to strategic leadership. Increasingly, leadership is recognising the potential of procurement to guard against risk, drive sustainable practice, and be a key enabler in helping the business identify and capitalise on new opportunities.
Procurement is undeniably on a journey from being a back-office cost-cutting function to a key driver of strategic wins for the business. In 2024, procurement teams should continue to capitalise and build upon existing wins as they continue their optimisation journey. For those lagging behind, the time to begin their transformation from functionary to value orchestrator is now.
2. More space strategic, value-add work
A vast majority of decision makers surveyed by Amazon Business last year revealed that they needed to outsource elements of their procurement function to a third party. It’s a known fact that the current procurement industry struggles with a lack of the necessary human resources, skills, and systems to keep pace with mission critical operational demands. With those demands only expected to get more complex in 2024, procurement teams need to find ways to spend less time on low value manual work and refocus their efforts on high-level, strategic activities. Adopting low-code platforms, AI, process automation, and other technology could be a way to execute on this necessary transformation.
3. More investment (and hype) surrounding AI, automation, and analytics
2023 was the year when generative AI exploded into the spotlight, attracting massive amounts of hype, interest, and investment. However, just a few weeks into 2024, you can see excitement starting to cool, as organisations struggle to find effective applications that justify the price of admission.
In 2024, we can expect to see massive AI utilisation in data analytics, in process automation, and other elements of the S2P process, but generative AI adoption in ways that produce meaningful benefits are likely more than 12 months away.
4. Low code, higher automation in S2P platforms
Managing the source to pay process is increasingly complex, and time consuming to orchestrate. In 2024, with pain points like this increasing complexity (due to climate instability, compliance regulations, etc.) and talent shortage, the adoption of more low-code platforms will increase the ability of procurement teams to automate significant elements of their operations.
5. Scope 3 comes under greater scrutiny
A recent report found that around two thirds of procurement professionals in the US, UK, and Europe feel that their Scope 3 emissions reporting is more “best-guess” than hard fact. With regulatory scrutiny—not to mention public opinion—growing less and less lenient with regard to greenwashing and climate inaction, procurement teams need to make 2024 the year they take meaningful action to create transparency beyond Scope 1 and 2 emissions.
This obviously represents a significant challenge. Scope 1 and Scope 2 emissions are relatively straightforward compared to the sprawling, often opaque morass of Scope 3. Inaction is not an option, however, if organisations are to meaningfully pursue their net zero by 2030 targets.
6. Mission-critical Big Data
Collecting, managing, and effectively drawing insights from big data is and will remain one of the defining challenges for the modern enterprise. A proliferation of data from IoT devices, cloud-based platforms, and a general increase in the amount of technology being integrated into the procurement process (not to mention an increase in awareness of how important it is to gather as much data as possible) is leaving some industry players overwhelmed.
Vast silos of data with no meaningful way to draw insights from the unstructured mass create more problems than they solve. 2024, then, should be the year that procurement not just recognises the importance of data, but the absolute criticality of putting systems in place to manage it effectively.
7. AI achieves greater autonomy in planning tasks
Even as the shockwaves of the COVID-19 pandemic recede from the global supply chain, macroeconomic forces still conspire to place increased pressure on supply chains and procurement teams. Forward planning is more important than ever and procurement professionals are finding themselves increasingly struggling to meet the demands of “a more complex, multi-tiered, more nuanced world.”
Using artificial intelligence to more effectively run scenario analysis could have a transformative effect on the S2P process, allowing low-touch planning driven by AI to eliminate manual work, analyse data at scale, identify and flag anomalies, and even start making suggestions to humans as to how to proceed. There is still some doubt over AI’s ability to handle tasks consistently with minimal human oversight, but the tide of public opinion is starting to change.
New data from Emergen Research suggests the procurement technology market will be worth approximately $17.9 billion in 2032.
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Increased adoption of cloud services, artificial intelligence (AI) and process automation are driving strong growth in the global procurement software market.
According to a report released this week by Canadian market research firm Emergen Research, the global procurement software market is expected to register a rapid revenue CAGR of 10.4% over the decade following the 2022 financial year—from a global valuation of $6.67 billion at the start of the forecast period to $17.90 billion in 2032.
The report’s authors found that “increasing use for cloud-based procurement solutions and rising need for automated and efficient procurement processes are key factors driving market revenue growth.”
The talent challenge
In the face of a talent shortage—exacerbated by growing demand and increasingly supply chain complexity—the report expects to see cloud-based procurement systems attain widespread adoption.
“Cloud-based procurement systems have many benefits such as easy deployment, flexibility, scalability, and lower infrastructure costs. This software allows for real-time access to procurement data, leading to better informed and timely decisions,” note report authors. “In addition, this software also makes it possible for companies to access procurement software at any time and from any location, which makes it easier to manage procurement procedures globally.”
Is automation the solution?
Artificial intelligence and machine learning will also support procurement teams in overcoming the pain points presented by the skill shortage, stricter regulations, and supply chain instability. The report suggests that the technologies—if correctly adopted—could be instrumental in “helping companies to automate increasingly complex procurement processes while enhancing decision-making.”
However, high up-front costs may present an insurmountable barrier to entry for some organisations, and a deterrent for others, the report notes. These costs include software licensing fees, implementation costs, training expenses, and any required hardware upgrades. Emergen researchers also note that concerns over data privacy and cyber security could slow adoption of cloud-based solutions.
Kathleen Anne Harmeston discusses some of the key items sitting on the 2024 agenda amid seismic digital transformation.
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Procurement, in my opinion, has experienced one of the largest direct knock-on effects of unprecedented inflation and geopolitical issues over the last two years (including supply-chain issues caused by Brexit, the US-China Trade War, and European instability of the Russia-Ukraine War).
Procurement’s challenges
We are seeing this impact in the form of cost increases across nearly all industries and challenges in securing and maintaining reliable, dynamic, and cost-effective supply partners.
Boardrooms are struggling to understand why they should invest further funds to bolster the CPO remit, including investment to help them technologically revolutionise the business and the function. Possibly this is due to a lack of visibility on how procurement can be a high performing business partner, which offers a proactive, seamless, automated and value-adding service supporting profitability and ESG efforts. CPOs are now tasked to sell the benefits of investing in procurement over and above the safety blanket of ‘cost reduction’ as the signature sell.
The above obstacles will also be underpinned by the phenomenal opportunity of integrating AI into the procurement function alongside many other digitisation opportunities. Those companies who welcome technological innovation of their P2P systems and supplier management processes are likely to have better competitive advantage and risk management as a consequence.
The general consensus I have gained from speaking with my peers are:-
Profitability (of course).
Agility and digital readiness within the P2P and business management systems.
Delivering ESG for the firm and not just giving “lip service” to the exercise.
Risk management within the elaborate complex web of supply chain networks.
Driving Innovation through the supply chain.
2023 saw the same old issues in limited control over and transparency in third-party spend. This was due to supply instability, semi manual processes, rising costs and value leakage from off-contract spend. With this in mind, boardrooms are more likely than ever to push back on the CPOs call for further investment. But this creates a circular argument of investment needed in the function, combined with business’ commitment to approved supplier compliance to meet the board challenges in 2024.
Moving to 2024
Digital readiness has become imperative as team members continue to work in hybrid or remote ways, but also because inefficient manual processes and limited digital visibility and automation of spend management causes significant lost opportunity and risk. Recent studies from KPMG and SAP show that 37% of procurement processes are still semi auto and manual and 77% of Executives complain they cannot access a good spend data real time. These studies have been further supported by research from Ivalua which states:
53% of procurement and supplier management processes have yet to be digitised.
22% of procurement teams estimate that they are wasting their time each year dealing with paper-based or manual processes.
50% of procurement leaders think the rate of digitisation within procurement is too slow.
47% say existing procurement systems are not flexible enough to keep up with constant change and market uncertainty.
Inefficient procurement processes often result in disorganised data management and reporting -ultimately leading to executive frustration. These issues further invite problems such as duplication of payments or delays in payment.
What are the technological innovations for 2024?
The shape and structure of the procurement division in the future will change quite dramatically with the ever-increasing integration of AI. When the second wave of more sophisticated generative AI software arrives – which improves its reliability of output, data leakage, and data security – AI and machine learning may well plug the gap of manual human input for certain portions of the procurement division. With AI (or any kind of automatic digitization for that matter) we will soon embrace the automation and celebrate the headcount savings in procurement, and instead ask for investment in greater strategic skills and the next level of development for our procurement staff.
AI truly has the potential to transform procurement. From specifically supply chain management, to helping with demand forecasting and inventory management to logistics optimisation, new product development cycle time improvement, and supplier engagement. AI will also help with managing our spend via creating predictive reports for cost reduction opportunities.
Specifics for CPOs look for in 2024
Advanced AP Invoice Automation Platforms
Advanced accounts payable invoice automation platforms process invoices in any format with good speed and accuracy. It means going touchless eliminates the pain of managing paper invoices. By reducing the cost per invoice, shortening cycle times, and increasing spend control, these cloud-based electronic invoicing systems offer built-in matching and automatically identify errors, duplicates, and overpayments. They ensure payments are only made for ordered and received goods. Many APIA platforms can be tailored to specific organisational needs. This is with features like cognitive OCR invoice capture, smart coding, and invoice approvals to further streamline the process. These platforms can integrate with existing financial or ERP systems for seamless digital payments. While their advanced features like duplicate invoices and fraud checks, along with integrated exception handling, demonstrate the future of invoice processing in the P2P cycle.
Mobile P2P solutions
Mobile platforms are becoming more useful and available in the P2P process by shifting to cloud and software-as-a-service (SaaS) solutions. The convenience of mobile apps allows users to manage procurement activities on the go. This is also while offering real-time access to crucial data and processes. This mobility not only increases efficiency but also enables quicker decision-making. CPOs can also integrate their P2P systems with other cloud-based applications, such as ERP, CRM, and BI, to create a seamless and holistic view of your procurement performance.
Data analytics and visualisation
Data analytics tools are the applications that enable you to analyse your P2P data in an actionable way. These tools will help you improve your decision making, performance measurement, and reporting. For example, you can use dashboards, charts, and graphs to visualize your spend patterns, savings achievements, and compliance levels. You can also use predictive analytics, machine learning, and natural language processing to generate forecasts for your P2P strategies. Visualisation software has also made huge strides in being able to share new product development ideas. This is also while helping progress the supplier collaboration and management agenda.
Integration of blockchain for greater transparency and security
Blockchain technology is rapidly transforming the P2P sector with its unparalleled transparency and enhanced security features. By integrating blockchain, businesses are able to establish immutable records for every transaction. This will significantly boosting both transparency and security within their procurement processes. This technology is particularly effective in fraud prevention and compliance adherence and supply chain tracking. It ensures that each transaction is reliably recorded and easily verifiable, underscoring its growing importance in the P2P landscape.
Supplier collaboration
Supplier collaboration is the practice of building long-term and mutually beneficial relationships with your key suppliers, based on trust, transparency, and value creation. It can help you improve your supplier performance, reduce risks, and drive innovation. For example, you can use supplier portals, e-procurement platforms, and digital contracts to communicate with your suppliers more effectively. You can also use supplier scorecards, feedback mechanisms, and incentives to monitor and reward your suppliers for their performance.
Sustainability and social responsibility
Global supply chains are complex and can be multi-tiered. This presents a serious challenge for CPOs with limited visibility into the supply chains for sustainability and social responsibility. AI-powered reporting will enable teams to keep track of supplier and product information. This is via using global data sources from different countries, regions and languages. The key is to raise the issues and gain the sponsorship to address the risks proactively. Mapping systems and technology can help but only if this policy is embedded within the business. There is movement from tier one contract management of supply chains to managing the supplier networks.
User experience and engagement
User experience and engagement with your P2P system, such as ease of use, functionality, design, and feedback is important for the function. Alongside engagement, it can help you increase your user adoption, satisfaction, and loyalty. For example, you can use mobile apps, chatbots, voice assistants, and gamification to make your P2P system more accessible, intuitive, responsive, and fun.
Concluding remarks
The P2P landscape in 2024 will be shaped by technological advancements and a shift in business priorities. From the integration of AI and blockchain to the emphasis on sustainability and mobile solutions, these trends are redefining how companies approach procurement and supplier relationships. Despite executive reluctance to engage in further investment, during periods of inflation and market stagnancy, digitisation must be embraced with the option to either pivot or perish. Adoption of new systems and processes requires training and capacity planning within procurement departments. This is so that the business-as-usual services can continue without a downturn in service levels. Businesses that adapt to these changes will enhance their operational efficiency and position themselves strategically for future growth and success.
Fairmarkit has revealed a partnership with ServiceNow and unveiled an automated quoting integration in a bid to scale efficiency.
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Fairmarkit has announced a new partnership and integration with ServiceNow to boost productivity for customers.
The company, which is a leading autonomous sourcing solution set on transforming the procurement of goods and services, has unveiled an automated quoting integration with the ServiceNow platform to drive efficiency.
Scaling efficiency
It is anticipated that the move will help enterprise procurement increase spend under management, source goods and services efficiently as well as operationalise DEI and ESG initiatives through an automated quoting process.
With Fairmarkit’s automation, AI and GenAI capabilities embedded within ServiceNow’s Source-to-Pay Operations solution, end users can automatically create, send and award quotations from within the ServiceNow interface which streamlines processes and decreases turnaround time for competitive quoting.
Buyers maintain the same level of user experience and functionality they expect from Fairmarkit sourcing including reduced cycle time, greater visibility into spend, higher savings and improved compliance and diversity maintenance from within the ServiceNow interface.
Initiated via a ServiceNow sourcing request, requests for quotes (RFQs) are automatically sent to suppliers and bids are collected and presented to the user for an award decision within ServiceNow. Once an award is made, a purchase requisition is created and the customer’s desired ServiceNow workflow is continued.
Revolutionising the way forward
Kevin Frechette, CEO of Fairmarkit, commented: “Fairmarkit’s integration with ServiceNow furthers our commitment to revolutionising the way all organisations buy and sell. We are fired up to work collaboratively with joint customers to ensure the most user friendly and efficient purchasing process possible.”
Kirsten Loegering, VP, Product Management – Finance & Supply Chain Workflows at ServiceNow, added: “From enterprise end users to seasoned procurement professionals, automated quoting with Fairmarkit will simplify the intake-to-award process, while also increasing opportunities for costs savings and efficiency gains. Establishing this partnership with the market leading sourcing solution opens the door for enterprises to bring more spend under management, enables end users to competitively quote with little effort, and paves the way for more value and less manual work.”
The ability to scale available space up or down on demand could provide procurement teams with an invaluable degree of flexibility.
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From retailers to manufacturers, enterprises that handle large amounts of product and raw materials have always needed places to put it. As a result, the vast majority of industrial real estate is devoted to warehousing, with 11.1 billion of the 14.8 billion square feet of industrial real estate in the US classified as warehouse space.
Warehouse square footage is essential, not only to logistics, but to the procurement department. You can’t buy things if there’s nowhere to put them. Procurement teams working to support the needs of the business as a whole are therefore bound by the limitations of the physical space the business maintains for storage.
Changing demands
A procurement function’s ability to respond to changing demands—either from within the company or when performing direct procurement in anticipation of demand from without—is limited by the physical warehousing space maintained by the enterprise. However, more space isn’t always the solution, as real estate is costly to buy, develop, maintain, secure, and so on. Small and even medium sized enterprises may not have the capital or resources to maintain their own warehouse space, and—in an era of e-commerce-first business models—may have more distributed business models than can be supported if warehousing space is internally owned.
The answer to giving procurement teams the flexibility they need to store, move, and acquire necessary stock for the business could lie in On-Demand Warehousing.
On-demand warehousing
The model “allows eCommerce businesses to access warehousing solutions as and when needed, without making a long-term commitment, through a pay-as-you-go system,” write Dr Banu Ekren, Dr Ismail Abushaikha and Dr Hendrik Reefke in a recent report. By using a platform to purchase space within a larger warehouse on a short term basis, businesses gain the flexibility to grow (or shrink) their procurement of inventory in line with the demands of their business, without the need for long-term rental agreements or costly real estate purchases that the business “might” grow into down the line.
On-Demand Warehousing platforms can also reduce environmental impact by consolidating inventory from multiple buildings into singular facilities—reducing the need for heat, electricity, etc.
From shared responsibility to “blackmail”, an array of relationships exist under the umbrella of “partners” in the source-to-pay value chain.
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Whether in earnest or just in cynical pursuit of a hot new buzzword, it seems like no one in the procurement and supply chain sectors actually buys things anymore. Instead, goods are sourced from a strategic partner—implying a simple transaction has been replaced by a closer, more meaningful and, supposedly, beneficial relationship.
For example, in the fashion industry—traditionally one of the most transactional industries for buyer-supplier relationships—McKinsey’s 2023 CPO survey found that even between fast fashion brands and their suppliers, relationships are becoming more strategic, long-term, and mutually beneficial.
The number of transactional relationships reported by CPOs in the fashion industry reportedly fell by more than 50% between 2019 and 2023, from 22% to just 10%. That number is predicted by McKinsey’s analysts to drop to just 3% by 2028, as more than half of relationships in the industry evolve into “long-term strategic partnerships with volume commitments”.
The future of strategic partnerships?
According to McKinsey, the future of strategic partnerships between procurement teams and their supplier ecosystems looks bright in the fashion industry. This should be good news across other fields like medical supplies, consumer goods, food, and industrial manufacturing—as fashion is perhaps the industry with the most historically hostile relationship between buyer brands and the suppliers who manufacture their clothes, often for no guarantee of purchase, at rates so low they often result in untenable labour conditions. If some of the most predatory supply chains on the planet can grow into thoughtful, considerate strategic partners, then it surely bodes well for the rest of the world.
Or it would, if any of that were particularly true.
I’m not saying McKinsey or the CPOs that took their survey were lying. I’m sure they truly do believe their transactional relationships are evolving into strategic partnerships. But, as Maliha Shoab pointed out in a piece for Vogue Business this week, while “Those in charge of contracting suppliers for fashion brands say they are investing in longer-term strategic partnerships,” their suppliers “tell a different story.”
The reality is that research conducted by Fashion Revolution found that just 12% of brands publish a responsible purchasing code of conduct (virtually the same as last year and the year before that), and data gathered by Sanchita Saxena—visiting scholar at the NYU Stern Center for Business and Human Rights and senior advisor at human rights-focused consultancy Article One—points to truly collaborative and strategic partnerships between procurement teams and their suppliers being much rarer than procurement executives would seem to believe.
Reimagine supplier relationships
Some suppliers Saxena spoke to even characterised their relationships with fashion buyers as “blackmail”, revealing to Vogue Business that one supplier in particular recalled: “The company was threatening [us] saying, if we don’t agree on a reasonable discount, maybe next season [our] business volume might be affected. We were also told that if we don’t give the discount then there might be cancellations coming, and that kind of pressure… I wanted to give them a $20-25,000 discount, but eventually with the pressure I have to probably agree on almost double that amount… we didn’t want to offend them by any means.”
Other relationships were more mutually beneficial, and it does seem as though there is some action behind the partnership rhetoric in some areas of the fashion industry.
The point is, however, that procurement professionals’ imagined relationships with suppliers may be a whole lot more strategic than they actually are. There is a fundamental power imbalance between supplier and buyer in many industries, where small organisations farther up the value chain struggle to dictate terms to large corporations looking to cut costs more than build meaningful long term relationships.
The five most important challenges for procurement teams to meet in 2024 and beyond, according to Amazon Business.
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It’s no secret that procurement is undergoing the same backroom-to-boardroom transformation (dare I say “glow up”) that the IT department went through over the last decade. If every business in 2023 is a technology business, then by the end of the decade, it doesn’t feel unreasonable to claim every business will be a procurement business.
However, with prestige and importance comes pressure. The modern procurement function already faces challenges, from supply chain disruptions and rising prices to the existential need to reduce emissions, which will only grow more complex as the discipline moves close to the forefront of the modern enterprise. It’s no wonder that, while Amazon Business’ “2024 State of Procurement” report found that the majority of procurement budgets (54%) were set to rise next year, an overwhelming number of respondents confirmed that their procurement functions are in need of optimisation.
With 2024 still in its first month, we’ve broken down the five highest priorities for procurement leaders to focus on over the next 12 months, as well as heading into 2025.
1. Retaining and developing existing talent
Lastly, even more important than attracting new talent, the number one priority for procurement teams in 2024 will be retaining the talent they already have, and developing those procurement professionals to marry knowledge of the business and industry with an understanding of new trends, techniques, and technologies.
2. Attracting top talent
A report released by Gartner in December found that more than 85% of procurement directors and executives believe that their teams contain “adequate talent” to meet the future needs of their organisations’ procurement function. The demands placed on procurement professionals are changing, as the adoption of new technologies make the profession more data-driven and strategically focused on business value creation than ever. An evolving profession means attracting new talent will be a vital priority for procurement leaders in the coming years.
3. Reducing purchasing costs
Cost was king before the pandemic and, while procurement teams may have more than just their bottom line in mind, it’s still one of the most important differentiators for the function. Not only is procurement a key driver of efficiency within the modern enterprise, but costs are rising across the industry, with Amazon Business reporting that “Costs and Budgets” were the leading risk factor facing procurement over the next two years.
4. Refining procurement practices across organisations
Even as a newly celebrated discipline with a greater role to play in the modern organisation, a key indicator of a successful procurement strategy is that, most of the time, other departments don’t know it’s there. A successful procurement function empowers other parts of the business to make purchases with autonomy, supporting them in making decisions that are compliant, efficient, and cost effective. Developing the procurement practices that create good procurement habits across an organisation—not just in the procurement department—will be a key priority for procurement teams going forward in 2024.
5. Building more resilient, agile supply chains
If the 2020 COVID-19 pandemic taught us anything it’s that disruption is not a matter of “if” but “when”. Global supply chains—driven almost exclusively by cost-cutting parameters for decades—were decimated by the pandemic, and in the wake of lockdowns it has emerged as hard-won wisdom that the procurement departments of the future need to look at more than cost when building a supply chain. In the Amazon Business report, 81% of respondents revealed that they have internal or external mandates to purchase from different types of certified sellers.
Blockchain promises added transparency and security for the procurement process, but are the benefits worth the price of admission?
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Blockchain—the decentralised ledger technology that powers cryptocurrencies and NFTs—could be an immensely disruptive force in the procurement and supply chain management sectors. We’re going to take a look at how blockchain might impact procurement, and whether it represents a meaningful innovation or if the costs outweigh the benefits.
Blockchain: the hype
Using a combination of different technologies, including distributed digital ledgers, encryption, asset tokenization, and immutable record management, blockchain creates an unbroken and tamper-proof (in theory) chain of information.
For example, storing the entire service history of a vehicle, the transaction history of a house, or the provenance of a piece of art on a blockchain theoretically renders it trustworthy and incorruptible. A potential buyer could review the timestamped information included on the blockchain and be confident in its accuracy. In principle, blockchain could reduce or remove the need for intermediaries in highly regulated and complex transactions—like real estate, for example.
“Have you bought a house lately? Imagine if you could have transacted with the seller directly, even though you had never met, confident that the deal would be recorded in a way that neither of you could change or rescind later,” write Gartner analysts David Furlonger and Christophe Uzureau, suggesting that “You wouldn’t have to reconcile rafts of personal information with a real-estate agent, mortgage broker, insurance agent, property inspector and title company” if you were making a transaction using the blockchain.
Furlonger and Uzureau suggest that record keeping and verification is just the beginning and, once developed and combined with other technologies (characterised by lots of hyper and limited real world applications) like artificial intelligence (AI), the Internet of Things, and the Metaverse, the real potential of the technology will be unleashed, creating “whole new social and economic constructs in the peer-to-peer age of Web3.”
Blockchain: the reality
In actuality, Blockchain outside of applications for cryptocurrency isn’t actually… very interesting? It’s certainly not new. Blockchain technology not used to underpin a cryptocurrency is just a distributed append-only data structure. Often there are some users that are allowed to make additions to the structure. In the real estate example used Furlonger and Uzureau, that might include the homeowner, a surveyor conducting an appraisal of the property, the utility company providing electricity and water to the house, and professionals hired to perform maintenance on the property. A private blockchain could collect and verify the history of a property like rings on a tree, and provide an authoritative account that is, in theory, free from tampering. The thing is, that sort of verification is called a consensus protocol, and they’ve been around since before the 1960s—as have append-only data structures.
The reality is that the new, shiny applications for blockchain aren’t actually very useful. Supposedly, Blockchain technology offers up a way to verify information (or conduct a transaction) without relying on an intermediary, or blindly trusting a third party. “Trust-less” is the phrase that gets thrown around a lot. However, the result is often that you’re just trusting the technology underpinning the blockchain over a human or a public institution.
Building trust
As Bruce Schneier pointed out in an article for WIRED, “When that trust turns out to be misplaced, there is no recourse. If your bitcoin exchange gets hacked, you lose all of your money. Your bitcoin wallet gets hacked, you lose all of your money. If you forget your login credentials, you lose all of your money. If there’s a bug in the code of your smart contract, you lose all of your money. And if someone successfully hacks the blockchain security, you lose all of your money.”
One glaring example was the 2019 case of cryptocurrency exchange CEO Gerald Cotten, who died while being the only person with the password necessary to access US$145 million worth of other people’s Bitcoin. Far from being trustless, it would seem the people who lost access to their money were placing their trust in a single individual who died, leaving them no physical or legal recourse to get their money back.
There’s also the very valid criticism of blockchain-based technology that it’s an environmental disaster. NFTs caught most of the heat for this over the past few years, but all blockchain-based technology needs to be stored somewhere in a constantly active server. As noted by the NASDAQ in a report from earlier this year, “The energy consumption of blockchain technology results in significant greenhouse gas emissions, which contribute to climate change.”
So, blockchain is bad?
Not necessarily. I, personally, will stake what reputation I have on the fact NFTs and cryptocurrencies are misguided and valueless gimmicks at best and insidious, cynical techno-cults (that burn fossil fuels more enthusiastically than the UV lights at the Bored Ape convention burned out crypto bros’ retinas) at worst.
However, remember the boring version of blockchain technology? The append-only data sets we talked about before may not be new or especially sexy, but they’re an element of blockchain technology that could be incredibly useful for the procurement sector.
Blockchains in procurement
The procurement sector has traditionally struggled with opacity. Sourcing goods—especially from overseas markets—through networks of distributors and middlemen can muddy the waters and conceal vital steps in the source-to-pay process. The origin of goods, labour practices, contact with modern slavery or deforestation, can all be concealed in a murky supply chain.
Tracing the progress of an item from its raw materials through to a finished product is “often a challenge for today’s supply chains due to outdated paper processes and disjointed data systems that slow down communication. The lack of data compatibility exposes supply chains to problems like visibility gaps, inaccurate supply and demand predictions, manual errors, counterfeiting, and compliance violations,” notes an AWS report. However, with blockchain, procurement and supply chain management organisations can “document production updates to a single shared ledger, which provides complete data visibility and a single source of truth. Because transactions are always time-stamped and up to date, companies can query a product’s status and location at any point in time. This helps to combat issues like counterfeit goods, compliance violations, delays, and waste.”
Global network
If the documentation of, say, a shipment of EV batteries, can trace a direct line from a lithium mine in Australia to a factory in China through a global network of suppliers, all the way to their arrival at a factory in Ohio, the procurement department sourcing those batteries can scrutinise every piece of the value chain much more effectively for quality control, potential counterfeiting, and ESG compliance.
It’s not as flashy as Dogecoin, but it’s actually useful, especially as corporations make efforts to divest major polluters or other parties with poor ESG practices from their supply chains in an effort to reduce Scope 3 emissions and stop propping up reprehensible practices like modern slavery and deforestation.
Next generation AI tools can offer unparalleled visibility into the sustainability of organisations’ supply chains.
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There are increasing pressures on procurement departments to be a driving force in their organisations’ sustainable goals.
The process of buying, shipping, and generally moving physical products about is one of the larger sources of carbon emissions for the modern enterprise.
For consumer companies, supply chain operations typically account for more than 80% of greenhouse gas emissions, creating “far greater social and environmental costs than its own operations”, according to a study by McKinsey. The environmental impact of a company’s operations, and their extent into Tier 2 and Tier 3 emissions, is also becoming a more prominent part of the conversation, making the decision of who to partner with and for what more pertinent to an enterprise’s sustainability goals than ever before—especially as T2 and T3 emissions become the target of new ESG regulation.
The path to sustainable practice is increased visibility into procurement practices, supply chain impact, and the supply chains of ecosystem partners. Increasingly, procurement teams are artificial intelligence (AI) for these insights.
Responsibly sourced startups
The demand for AI-powered sustainability in the procurement sector is already driving investment in promising new tools. The Copenhagen-based startup Responsibly was founded in 2021, and in October 2023 managed to leverage its work on AI-driven sustainable procurement tools into a $2.4 million funding round, aiming to further develop its project of “democratising access to sustainable procurement”.
The company combines an AI model with large data sets to allow users to analyse their suppliers and potentially take action to restructure their procurement practices. The data analysed relates to suppliers’ carbon emissions and links to deforestation, but also their gender pay gap, human rights records, and more. The company has already accumulated several high profile clients, including the CERN research facility.
Data-driven, sustainable decision making
The success (and sustainability) of a supply chain is, first and foremost, an issue of visibility. Decision-making to reduce carbon emissions, cut costs, and improve resilience is almost universally a matter of understanding the factors affecting what has traditionally been a very murky, complex, impenetrable system. Using AI to maintain visibility into upstream manufacturing, purchasing, and logistics channels is critical in a world where supply chains are more complex, and the critical eyes of regulators and other organisations w
