Procurement Looks at Spend in New and Different Ways

By Susan Avery

October 12, 2015 at 8:55 AM

Perhaps Christina Ruggiero, Chief Procurement Officer at Coca-Cola Refreshments USA, says it best: “I don’t want to be the square on the bow tie.” 

Ruggiero was speaking about procurement’s role in connecting internal stakeholders with suppliers through technology (and not acting as a hinderance to collaboration) during the session, “Evolution of a CPO: From Cost Control to Value Creation,” at the Zycus Horizon 2015 event held recently in Greensboro, Ga. 

More than 200 CPOs, procurement vice presidents and directors attended the event that featured 27 knowledge sessions with industry thought leaders, including keynote speaker Stephen J. Dubner, co-author of the book Freakonomics and other works. 

Also on hand were Zycus executives to preview the company’s technology roadmap and demonstrate its latest products. Richard Waugh, Vice President, Corporate Development at Zycus, served as co-host with Dawn Tiura, CEO at Sourcing Industry Group (SIG). In addition, there was plenty of time for networking. 

christina ruggiero.jpeg

Ruggiero’s comments echoed through the two-day event, emerging as a theme that procurement is about more than managing costs. As many of the speakers remarked, procurement is about understanding business strategy of stakeholders as well as the market and selecting innovative suppliers to help execute the strategy, adding value to the organization.

Procurement Role

In a session, “5 Predictions that Every Procurement Professional Must Know,” Dr. Robert Handfield, Distinguished Professor of Supply Chain Management at North Carolina State University and Director of the Supply Chain Resource Collaborative, said “the welcome mat” for procurement to drive out costs is “worn out.” Procurement’s conversations with the company’s businesses sometimes reveal that the stakeholders have no idea of what they are spending, he said. “Procurement can help with the budget at looking at the spend in new and different ways.”  

Zeroing in on one of the five predictions, that procurement will be focusing on post-content award management, i.e., managing and leveraging supplier relationships, Handfield pointed out that 70% of Supplier Relationship Management (SRM) is internal stakeholder management, and suggested that procurement can effectively manage 10-12 relationships with strategic suppliers. 

RobHandfield243.jpg“Procurement is about creating a communication platform,” he said, describing procurement as ombudsman or the single source of truth in the organization. “Suppliers need this channel so we can tap into their innovation.”   

As part of the prediction, Handfield also touched on procurement’s role in managing supply chain risk. “Be smart using supplier data,” he said.

Another session, “How to Develop a Value Centric CPO Function, Ground Up,” featured procurement leaders already putting some of these concepts into practice. 

“The perception of procurement in the organization is changing,” said Chris Martus, Senior Director, Strategic Sourcing at the Mosaic Company. “Number-one, we need to bring value. The financial crisis helped by giving us a stage to show what procurement can do. Today, the perception is that procurement is part of the solution.” 

Like Ruggiero at Coca Cola, Martus described procurement as working with every group and business inward and suppliers outward and providing real value in linking the two. “We see what happens in the organization and what the market offers,” he said. “We need to be an advocate for what the company needs and pull in suppliers, and perhaps make changes to find new sources or to outsource.” 

Supply Chain Risk

In her keynote, “Is the CPO Finally Ready to Get a Place on the Board?,” SIG’s Tiura admonished attendees to “stop acting like buyers.” She also suggested when managing risk, procurement look beyond the financial. “Until we do that, we are not strategic, she said, adding that procurement is uniquely qualified for the role. “Procurement is the single point of contact in the company.” 

Her talk provided a lead-in for Deborah Wilson, Research Vice President at Gartner, who spoke on “Cyber Security: What the CPO Needs to Know.” 

 debbie wilson.jpgWilson began by asking the group, “We love the technology, but is my data safe in the cloud?”

She pointed out that 90% of new software deals are subscription based, “a testament to the acceptance and popularity of the cloud.” Companies are choosing cloud technology for its agility and innovation. Yet the number-one obstacle to adopting cloud technology is security and privacy. “We don’t know what we don’t know,” she said. “That may keep us up at night.” 

What does procurement have to worry about? Wilson said, “People are phishing. We have to take this very seriously. We don’t know who is accessing the company’s data.” She explained that contractors have access to data, often even after a job is completed. She also shared an instance when an e-auction tool allowed bidding suppliers to view one another’s pricing. 

Wilson’s advice is to be proactive. “Procurement has a seat on the board,” she said. “There are things we can do to help our company protect its reputation. Encryption will not help. What you can do is, when choosing suppliers and negotiating contracts, be sure to insist that the supplier report any breach within 24 hours.” 

She also said that it’s important to have a good audit trail, and to select a supplier with role-based security that limits access to data to job relevancy. "Your suppliers need your protection," she said. "They trust you with information.” 

Procurement Vision

aatish dedhia.png

Zycus CEO Aatish Dedhia took the opportunity to lay out the company’s vision for procurement leaders attending Zycus Horizon 2015. 

Acknowledging that the draft of his presentation didn’t veer from one he gave to the group a year ago, he said, “We are charting a path we decided a long time back and presented at an analyst conference in 2009: To be the top global procurement suite, an alternative to an ERP system.” Zycus is achieving this, he said, through a comprehensive product suite, ease of use and responsiveness to its customers.  

Dedhia spoke to changing market conditions. He said that customers are no longer buying piecemeal, that they are looking for a complete sourcing suite. In response, Zycus has been moving in that direction now offering 90% of a full suite, and is successfully executing. He pointed out that Zycus has a top spot as “leader” in the 2015 Gartner Magic Quadrant for Strategic Sourcing Application Suites. 

Of this achievement, Dedhia said Zycus “is keeping the customer first. We are grounded and responsive.” 

At its heart, Zycus also is a product-driven company, Dedhia said, pointing out that the R&D team numbers 250, representing 40% of the workforce. Adding, “We bring you something new every four weeks,” he mentioned some recent innovations: contract authoring using Microsoft Word and an iSave "cockpit" that tracks business processes. 

Offering a glimpse into the company’s source-to-pay vision, he said, “The integration of operational and strategic procurement is critical. Ensuring that there is no maverick spending needs tight integration between contract management and e-procurement.” He described QuickSource (a tool for buyers and requesters) and QuickSearch (which searches historical spend data). 

As for the company’s procure-to-pay vision, he said that Zycus is introducing more modules to help the accounting department, including mobile e-invoicing that can be used for tail-end suppliers. He also described the Zycus Rainbow, a new user interface that provides more than the business-to-consumer experience allowing procurement “to ask the way you think.” He said the company is beta testing this with some customers. 

Continuing on the event theme of making a connection that ran throughout Horizon 2015, Zachary Bolt, Director, Solutions Consulting at Zycus, offered a demo on how the technology connects—with external platforms, i.e., ERP systems, the Microsoft Office suite and mobile operating systems iOs and Android. Similarly, he showed that the Zycus source-to-pay suite connects suppliers through iConsole and iManage.  

 

 

 

 
 
 


Tags: purchasing Procurement Technology procure to pay sourcing source to pay
Category: News Article

Susan Avery

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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. 


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