Greg sat down with ScoutRFP to discuss sourcing’s ever-evolving relationship with business – he talks culture, Moolah (the spend-it-like-its-yours monster) and how CPOs can work with the pace of change at an organisation to reach sourcing-stakeholder “utopia.”
Smart Procurement World topic highlight: When is ‘impact sourcing’ the right fit for your global sourcing digitisation strategy? Presented by Sanet Shepperson, property and procurement executive at Cell C.
You’ve been the CPO at Oracle, Salesforce, and now VSP. How have best practices in sourcing evolved since you first started?
GT: There has been a paradigm shift in terms of procurement’s role and their contribution to the organisation. There is a focus now on understanding (the term is often overused now) “big data.” The ability to understand the underlying data, trends and relationships, and predict future outcomes will fundamentally change procurement’s value proposition. The shift to being able to get in front of it from a planning and forecasting perspective will help us better align with our customers.
Also, at Oracle (it’s been almost 8 years since I left Oracle) we had the ability to auto-generate POs, so certain conditions were met on a requisition (shopping cart) and the system would generate a PO, absent of any oversight. I can see that shifting and becoming more prevalent in the space – a form of robotic procurement. The result is that we free up procurement resources (aka talent), so that they can focus on relationships, building a pipeline of opportunities, and delivering value, as opposed to “tending shop.”
With these new expectations, as a CPO, what is the biggest hurdle you face in implementing a new sourcing process at an organisation?
GT: I was given some very sage advice at VSP: “don’t rush to decisions. Take the benefit of time; you have X number of days/weeks/months to do a thorough assessment and discovery of what lies ahead for you. Really leverage that time to develop your plan and don’t be too quick to act.”
My approach is problem solving, so it was difficult advice to heed. When implementing change it’s important to give credence to the culture and the appetite for change. A high-tech, high-growth environment has a different pace of change than the insurance space. So, when changing behaviours, you really have to understand the culture in which you operate; the appetite for change, the risk tolerance, and the level of executive support you’ll have.
Then you must ask: what is the impetus or platform for the change? Is there an inherent risk in the current process or way of doing things? What value are you trying to bring? Reduced cost? Risk mitigation? Whatever that value is, make sure you take the appropriate time, because you will only be given that one chance to leverage it. Don’t rush to deliver something.
You spoke about the pace of change–Once you find a cadence, how do you execute?
GT: How you manage and execute on change depends on the culture of your organisation. At VSP we reached out to marketing early and developed a drip campaign, with the message and theme “Spend It Like It’s Yours — SILIY” (sounds like silly), which aligns with one of our core values of having fun. We created this character, “Moolah,” and Moolah does exist–it’s a 6-foot tall, furry, purple monster–and we did these video vignettes (one in which Moolah drag-races a Lamborghini) to create awareness around the change behaviours we’re looking to instil in the organisation.
Another tactic we tried to leverage early was our admin group. They have access to the execs and access to the team and are sought after by the team to resolve issues and provide guidance, so we adopted the “train the trainer” approach. We tried to socialise the information with them early to make sure it resonated and went through training with them first, then tailored the trainings based on their feedback.
Ok, so you’ve considered the culture, developed your campaign, and identified your communication channels. What’s the end game? What does that “utopian” sourcing relationship look like?
GT: To me, it’s all about driving early engagement. When the business has the epiphany, “Hey, I need X,” we’re sitting next to them helping them solve those problems in real time, early and we’re helping guide the process to reduce the timeline start to finish.
The expression used to be “a seat at the table”, but it’s not so much a seat at the table, as it is having an open, early collaboration with the business to establish what the needs are before they get too far down the path of single sourcing, where you’re in the position of trying to sort out what’s fair and reasonable from a pricing and terms perspective.
And if early engagement is the gold standard, what about the other side of the coin? Are there repercussions to engaging sourcing late in the process?
GT: When you’re engaged late, the business will throw a contract over the wall and you’re expected to turn on it. That’s going to impact your load balancing of projects tasked within the team by putting you in a reactionary mode of managing your workflow instead of on a proactive basis. When you react to a contract coming over the wall, in theory you actually have to carry more resources to build that flexibility into your team; it affects you negatively from a budget standpoint. When you’re engaged early you’re proactively working to better manage those work streams based on the bandwidth and throughput you have as an organisation.
Also, we find that if we’re late to the party, the supplier and the internal customer are already very tight and information has been shared that puts sourcing and procurement at a disadvantage. We’ve seen cases where the business will actually share their budget with the supplier. So the supplier designs the solution around the budget, as opposed to really understanding the need and working to a number that affords the best opportunity at the best price.
How do organisations fall into this pattern? Is there a root cause for this disconnect?
GT: Well, there are a number of factors. The business perceives itself as the subject matter experts, they want to own their own decisions. And from their perspective, engaging procurement late allows them to be agile and flexible, and to better manage the overall project timeline. In reality, engaging us late only extends the process.
It’s also cultural. It could be embedded in how they operate over the years. And that’s really the biggest hurdle in demonstrating value. You must show the business how you can become an extension of their team to make their lives easier.
Sanet Shepperson, property and procurement executive at Cell C, will be discussing how digitisation makes supply chain more efficient, agile and customer-focused at Smart Procurement World Indaba in September.
Greg is a recognised global executive with more than 25 years’ experience leading a wide range of organisations, including operations, procurement, customer support, supply chain management, shared services, finance and contracts. He is a founding member of the Bay Area Procurement Council, comprised of Silicon Valley and Northern Californian procurement executives.
Courtessy of www.scoutrfp.com