Procurement's time has come. Standing for something can be a great way of standing out. And when it comes to sustainability and having a purpose, supply chains offer great potential.
“This is the moment for procurement to become more strategically important,” Patrick Dunne, Director of Group Property, Procurement and Cost Transformation at Sainsbury's told delegates at the 2019 Chartered Institute of Procurement & Supply (CIPS) Annual Conference, near the Houses of Parliament on 31 October.
Having an identity has become increasingly important for businesses and organisations of all sizes. While that’s partly a sign of the times, standing out in a crowded market calls for more than just good prices and great service – customers need to be able to identify with the companies they interact with.
This, and the role of procurement in a constantly changing world, were key focal points for the attendees.
During the opening session, Dunne joined a panel on the issues facing the industry, alongside James Allen, Asset Management Director at Arriva, Melinda Johnson, Commercial Director at the Department of Health & Social Care, Alf Noto, Chief Procurement Officer at Deutsche Bank, and Juliet Sotnick, then Chief Supply Officer and Chief Sustainability Officer at Babcock (now VP for Procurement and Supply Chain, IHS Towers).
Holding yourself up as an example of good practice has the potential to backfire, Alex Jennings, the Chief Procurement Officer of DS Smith, pointed out in a later session. “We’re all only one newspaper article away from our whole worlds being turned upside down,” he said. And others echoed that sentiment throughout the day.
With all businesses facing intense scrutiny, grassroots movements and fast-paced social media networks mean that any skeletons hidden in the closet of your supply chain are likely to be found. And once negative stories emerge about a brand, they can fly around the world in minutes, attracting the attention of millions of people.
How well do you know your supply chain, Jennings asked?
While tools and technology abound, most manufacturers have, at best, visibility of their immediate suppliers. Anything below that first tier is likely to be invisible. The truth is, as he pointed out, “if you dig deep enough into almost any supply chain it’s posible you’ll find examples of child-labour, unsafe working practices, and even modern slavery.”
Having control over all your purchasing and limiting the amount of maverick spend across your organisation helps. It may never be possible to say with absolute certainty that your supply chain is free of these concerns. A focus on spend visibility is vital here. The easier it is to audit all your purchases the more effective you can be at partnering with suppliers who are less likely to expose you to such risks.
Tools you can trust
The role of technology was another key topic. While it might be hard to remember what things were like before it became such an important part of everyday life, several of the speakers stressed that technology is a tool and not a magic wand.
Rob Metcalf, Group Purchasing Manager at JCB, said it needs to make a tangible difference. “Why have people whose only job is to turn up each morning and process a large stack of paper invoices?” he asked. At JCB, his team eliminated paper invoices from all indirect procurement.
That raised an important question from a member of the audience – what happened to all the people who were manually processing invoices? They’re all still there, working on different tasks, Metcalf said. They handle queries, for example, and are involved in more valuable activities. When it comes to the use of technology, it needs to be easy to understand, simple to use, and deliver a clear benefit, said Sainsburys Dunne.
As RS Components has seen with the development of RS ConnectPoint®, this is an especially important consideration in a busy industrial setting. If the person who needs to place an order isn’t desk-based and doesn’t have access to a PC on their desk, this simple act can be time-consuming and complicated, and time away from a workstation is non-productive time.
If technology is difficult to use, it risks becoming yet another time-intensive burden.
AI, data and the future for people
With the next wave of technology, there are additional challenges to consider. Data, big data in particular, makes it possible to get more detailed insights than ever before. But vast amounts can be overwhelming. Without the right analytical processes, that volume of information will be little more than a distraction and will never feed into an evidence-based decision-making strategy.
With AI and automation, as with the JCB invoice processing scenario, the spectre of job losses haunted the conversation. But there may be some confusion around cause and effect, as one audience member pointed out: “There may be a business need to reduce headcount in some areas. AI and automation can be the way you deal with that going forward – being able to continue being productive.”
It was the theme of sustainability that raised its head most often. Helen Alder, Head of Knowledge at CIPS, underscored this when talking about some of the key findings from the Indirect Procurement Report 2019.
“It’s not uncommon for sustainability to suffer when the economy is under pressure,” she said.
However, while some companies once saw corporate and social responsibility as a box-ticking exercise, they’re now taking it more seriously. As awareness of these issues grows, there’s a greater need for supply chain visibility and the need to be straight in your dealings is more important than ever. Now it matters to customers, staff, suppliers, and even investors.