By Susan Avery
McDonald’s restaurants have the Big Mac. Procurement has cost savings. Every few weeks or so McDonald’s makes changes to its menu to keep its brand fresh, holding on to the Big Mac, but also adding an item or two.
Procurement should act like McDonald's.
That’s the thinking of Jean-Jacques Beaussart, Director of Global Procurement at Deloitte Touch Tohmatsu. Beaussart participated in a panel discussion, “The Procurement Professional in 2014: What is the New Normal?”, at ProcureCon Indirect East 2014 recently in Charlotte, N.C. Finding new ways for procurement to add value--over and above its core mission of reducing cost--was a theme that carried through the two-and-a-half day conference.
In the session, “Examining the Success of Toyota Motor Sales’s Full-Scale Transformation”, Bonnie Clinton, Chief Procurement Officer, presented a case study of her first 18 months in her role as CPO with responsibility for the indirect spend. As she sees it, “Procurement is a strategic asset the business relies upon to drive new value.”
Clinton said she had her work cut out for her. When she arrived, two-thirds of her team was processing transactions. She told the procurement professionals gathered for her session that she needed “to flip” that so that two-thirds of her team would serve as consultants, “bringing innovation and value to the business.”
Echoing Clinton's remarks as a participant in the "New Normal" panel discussion, Joanna Martinez, Chief Procurement Officer at Cushman & Wakefield, said that procurement professionals “need to understand the business, and adapt your skill set. Forget about what you like to do. Have courage.”
Also on the panel, Deborah Beavin, Chief Procurement Officer at Humana Inc., added that procurement needs “to position itself as a a business leader as much as a leader in procurement.”
In another session, Craig Laudadio, Manager, Market and Supply Intelligence at Xerox, said, “We need to learn to grow in new ways.” He described the role of his team which provides information to the company’s category managers for such complex buys as pharmaceutical benefits “as helping to raise the entire organization”.
Speaking from experience as a CPO as well as a Chief Financial Officer, Lamar Chesney who served in these roles at such companies as Coca-Cola Enterprises and Delta Airlines, told the procurement professionals attending his session, “You will only be seen as a strategist if you act like a strategist.”
More than 300 procurement professionals attended ProcureCon Indirect East. In the ProcureCon tradition, the first day of the conference is reserved for procurement practitioners only. Twenty-seven suppliers that provide indirect goods and services joined the group in an exhibit hall and some of the educational sessions later in the day.
ProcureCon events have unique formats: The agenda consists of short case study presentations, panel and roundtable discussions and plenty of opportunity for networking. Break-out sessions this year were divided into three tracks: Supplier Management and Risk Mitigation, Staff Management and Process Improvement and IT Procurement.
Partnering with My Purchasing Center, ProcureCon Indirect presented the 2014 Excellence in Purchasing Indirect Categories (EPIC) Awards during a luncheon ceremony. The awards honor achievement in indirect procurement. My Purchasing Center is a ProcureCon media partner.
In a session that provided the point of view of one of procurement’s internal customers, "The CIO’s Perspective on IT, Sourcing and Procurement: Where it is Today and Where it is Headed Tomorrow", Tom Cahill, Director of Global Information Technology at FMC Technologies, said that the company’s growth and a concern for quality led his team to seek the help of procurement.
Joseph Richardson, who was Manager, Corporate Indirect Procurement, at FMC Technologies at the time, worked with Cahill to put together a skilled IT procurement team. “I give Joseph a lot of credit,” Cahill said. “Now, procurement is taking the lead in negotiations with suppliers.” Now President and CEO at Professional Purchasing Partners, Richardson served as chairperson for the first day of the ProcureCon conference, and led an executive think tank discussion on onshoring and nearshoring.
Talent management continues to be a hot topic among procurement professionals attending conferences--and ProcureCon Indirect East is no exception. In a panel discussion on succession planning, Marianne Armstrong, Corporate Training Manager at United Rentals, agreed with Craig Demarest, Senior Director, Chief of Procurement at RJ Reynolds, when he said that his team provides the company with a treasure trove of talent.
“Sourcing goods and services is not just about procurement,” Armstrong said, reiterating the value the function adds. “Procurement understands how the business can profit.”
Cushman & Wakefield’s Martinez and Linda Winter, Director, Corporate Services Sourcing at PG&E, hosted a Women in Procurement Breakfast Boardroom Meeting, where the topic of managing talent also came up in the form of mentoring. The women at the meeting discussed where to find a mentor, how to be a mentor and reverse mentoring, the process whereby older workers learn from their younger colleagues, particularly how to use new communication tools such as social media in procurement.
Bill McNally, Assistant Administrator, Procurement at NASA, provided ProcureCon Indirect with an insider’s look at how the organization sources goods and services demonstrating that his team faces many of the same challenges as the procurement professionals in the room. Describing how his team is working to reduce costs of processing transactions while streamlining supplier selection, he said, “We don’t want to risk not having a mission done properly.”
Exhibitors consisted of these supplier companies: SC&H Group, IBX Business Network, Superior Group, Scanmarket, Teligistics, Rage Frameworks, Bureau van Dijk, Cvent, MSX International, The Select Group, Beeline, Ariba, Insight Sourcing Group, Coupa, Carlson Wagonlit Travel, IASTA, Fieldglass, Verian, GEP, Hubwoo, The Midas Exchange, Denali Group, Schneider Electric, Staff Management, Paladin Associates, Allegis Group Services, IBISWorld.
In a meeting with My Purchasing Center in the exhibit hall, Joy Dasgupta, Senior Vice President, Marketing and Alliances, and Nick Adams, Vice President, RTI Solutions, at Rage Frameworks, said they on hand to speak with procurement professionals about risk management, a topic they see as underserved especially as the supply chain becomes more fragmented. It's also an area where procurement needs to take a leadership role. Procurement needs to look at more data on more suppliers more often than they do now, Dasgupta explained. “Less than 5% spend enough time on this now,” he said.
Additional sponsors included: Ariba, MasterCard, Progressive Promotions, Robertson Interactive, TCG Consulting, Zycus.
Speaking as a practitioner, Deb Stanton, Chief Procurement Officer at MasterCard Worldwide, offered a case study on how her team sourced its commercial (procurement and T&E) card programs. The team selected a provider bank going through a global RFP process as any other procurement team would, she said.
Stanton suggested ProcureCon Indirect attendees invite the banks to present their products and services to the procurement team. “It’s a good way to educate yourself before the RFP,” she said. Her team's plan for the company's commercial card program: to put 25% of the organization’s spend on the card, including higher-dollar buys to take advantage of card rebates. She declined to name the bank that won their business.
ProcureCon Indirect East 2014 is produced by Worldwide Business Research. The next ProcureCon event scheduled in the U.S. is ProcureCon for Manufacturing 2014 which will be held on June 16-17 in Milwaukee. ProcureCon Indirect West 2014 is planned for September 15-17 in Phoenix.
Also see the My Purchasing Center articles:
Susan Avery is Editor-in-Chief at My Purchasing Center. She writes articles, blogs and white papers and manages and creates other content for the online procurement and supply management publication. She produces and moderates roundtable discussions, podcasts, webcasts and video interviews. Susan has 30 years experience covering procurement and supply management for Purchasing magazine and Purchasing.com.
George E. Krauter
When one defines third-party MRO (3PMRO) success, one assumes that fundamental operations are being executed and that expectations are being met (i.e., ROI goals are surpassed} Read More
The US Labor Department reported in March of this year that there were 6.6 million job openings, a record high. Although most of us applaud these numbers Read More
Millennials working in the supply chain management field don’t fit the mold that the older generation assumes for them. APQC’s recent study Read More
Staples Advantage is the one supplier that offers all the business solutions you need, all with the expertise of a specialty vendor. Read More
It started in 1972 with an idea, a new concept in distribution. Today, Digi-Key Corporation is one of the fastest-growing electronic component distributors in the World. The stimulus for this growth is Digi-Key's customer-centered business philosophy… Read More
Procurement and supply management leaders have a seat at the table, and management’s expectations are high. But what do CEOs really want, and is purchasing delivering on these expectations? This webcast looks at how procurement and supply management … Read More
At world-class companies, purchasing’s influence touches just about every area of spending. But, how exactly do procurement teams get to the point where other departments approach them for help with sourcing such indirect categories as human resource… Read More