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How to drive out real value

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Today most procurement functions are searching for opportunities for their businesses beyond just cost savings. The journey to this point though has been a long one, seeing the function move from simply processing POs and buying the stationery through to them being an integral part of the recovery from the global recession of 2008.

 

Th search for those opportunities have tended to focus on trying to secure innovations out of the supply base, those ground breaking new inventions that keep a function and business one step ahead of the competition. However, those opportunities also extend to utilising new technologies and trends such as Big Data and the Internet of Things (IoT) to gain a greater understanding of supply chains and where efficiency gains can be made in terms of production, delivery or the holding of stock.

 

Doing either of these things requires the function to posses a different set of skills and a different mindset, one that is way outside what would have been considered normal for a buyer from any industry just a few years ago. Most people saw buyers as tough negotiators who had with little regard for other functions or their suppliers. Their job was simply getting the right price, and key to that, they believed was getting it cheaper than they had the year previously. There was no regard for whether they made life difficult for the people inside or outside the business.

 

While it may have been true once, it isn’t true today and to secure this value buyers have had to develop these new skills and new mindsets. It is all about soft skills, those interpersonal skills that allow buyers to effectively communicate and work with stakeholders who work in different roles.

 

Many around the world recognise the importance of developing these skills and indeed the value that new technologies and innovation offers, but the debate continues to rage about how best to achieve it.

 

It has been a central theme of many of the events that Procurement Leaders have put on this year and will be the central pillar of the conversation at the East Coast Forum in Boston in September.

 

Walter Charles, CPO at biotech firm Biogen, is a big fan of big data and as chairman of the event he is to set about explaining to those that attend how he is utilising it to drive his function forward. Examples of what he has been doing have been mightily impressive.

 

A few months ago he told us of a big data transformation that he went through when he worked at Kraft Foods.

 

"The guy who did my analytics had a 450 million data element problem: 5,100 stock-keeping units (SKUs), 900 suppliers, 100 cost elements per SKU, just for labels," he said.

 

"We used to do that through Excel. To do the Excel analytics he would run roughly 172 scenarios and it would take two and a half months to get those analytics back. I couldn’t carve off a big enough chunk of that to make sense of it all. Enter big data. In order to get those analytics, I decided to bolt on a big data analytics tool, which allowed each one of these scenarios to be done in just 45 seconds, meaning he was able to do 172 scenarios in one and a half days, resulting in 15% to 20% savings."

 

He, like many others, recognises that the right skills are needed within a team to achieve that.

 

You might know where you want to get to, be it big data analytics or innovation, but without taking the right steps and developing your team along the way you will almost certainly be on the path to failure.

To book your place at the East Coast Forum click here.

Tim Burt
Posted by Tim Burt