What’s on the mind of CPOs in Australia?

Basware recently attended the Procurement Innovation Festival at Luna Park Sydney, where we interviewed a host of attendees, speakers and a few suppliers about their perceptions on what’s going on in procurement today and what they took away as lessons to learn and act upon.

Four key themes

In a nutshell, Delwin Kriel, Global & Multinational Corporations Sales Manager at Egencia, Expedia Group – supplier to Basware and exhibitor at the event – summarised the event’s key themes with two words ‘innovation’ and ‘partnership’ in four areas:

• New innovation

• A focus on the future

• The use (and upgrading) of systems and

• The importance of leadership, management and interaction with other teams.

Procurement must give back

An experienced senior executive from a large financial institution said that, “Procurement is finally realising that it’s critical to have a direct impact on the bottom line and revenue by becoming a true enabler for the organisation so they can give back: both to shareholders and to customers”. The way he sees it, since using a source-to-settle platform, it has saved 3% on average, if you add this to spend leakage compliance, reductions in headcounts – or the ability to repurpose people to be more strategic, it’s possible to ensure that procurement retains its financial role in an organisation today, and in the future: but only if we are using the software available at our disposal.

For him, it’s about the importance of transparency and data for real-time information. He believes that it’s important to take a partnership approach, rather than looking at spend ‘after the fact’. If organisations are able to use software by focusing on serving internal customers this will not only improve their standing in an organisation, but also allow them to collaborate with peers like finance and build a culture of spend stewardship.

Procurement and value/s

Is procurement just about financial value? Not these days. One delegate, James Young from Leaseplan ANZ, says that procurement is not just about cost anymore. Procurement people need to change the mindset around this role to see it as a source of value: value for money, as well as staying true to your corporate values.

A shift in trust

This sentiment resonates with a senior procurement leader at Kerry Foods. He said that procurement is becoming engaged at an external customer level in order to co-develop and establish working models that benefit both suppliers and purchasers. But in order for that to happen there has to have been a shift or change in trust. Today, procurement is talking directly to customers and suppliers and leaders are engaging in reciprocal trade opportunities.

Diversity, inclusion and agile procurement

How can procurement give back to communities? Donna Ray and her colleague from CSIRO talked about the value they gained from Steve Fordham’s presentation. He talked about the importance of open thinking and embracing diversity and inclusion, using procurement as a force for good – not just to comply with targets for engaging with indigenous businesses.

Another perspective on the importance of social inclusion within procurement strategies came from Sam Rimal, Procurement Manager at Service New South Wales gained value from the perspective shared about diversity and inclusion, but wanted to share his current bugbear: agile procurement. Sam says that while everyone talks about agile procurement we have to be realistic about it to balance the ability to be proactive, with the need to plan ahead. He says you actually need to plan ahead in order to be proactive in an agile way.

Lessons for procurement leaders:

Craig Taylor, ANZ Head of Procurement at Kerry Ingredients said the message that Paddy Upton shared in his session really resonated with him. Paddy spoke about the need for every leader to be the best in three ways: technically, personally and professionally. Being able to be a better person helps all of us perform at a higher level – and this is true for procurement leaders, too.

Craig reflected that some cutting-edge organisations have become jaded over time, but he sees a light at the end of the tunnel. He believes that the new focus that procurement are putting on customer and value propositions will change this. While procurement was once the second cousin twice-removed who had to be invited to the wedding for political reasons, if they change their approach, Craig believes that they will be invited to sit at the parents table, in time.

Procurement is no longer myopic

A senior sourcing executive from an enterprise communications organisation said that he found the conference informative, and said it had benefited from the international research underpinning it but, most importantly, he said that while procurement used to be myopic, it isn’t anymore.

This agrees with Jason Penrose, CPO of Westpac’s experience of the Procurement Innovation Festival as a “refreshing change”. He noticed that the forward-looking view he saw the conference is important for procurement to adopt in order to be able to evolve and change. He said that he benefited from looking at what other industries are doing to drive change, leadership and technology and felt that the conference is a great enabler.

Daniel Cameron, and experienced CPO of organisations across a number of industry sectors, agrees that procurement is changing. He says that the focus has shifted towards being able to unlock value through focusing on stakeholder engagement and building sustainable relationships with third parties. He described an equation:

The new procurement equation

When great user experience drives engagement, it curates more meaningful conversations which leverage insights which in turn results in value. Daniel Cameron says that it’s important to use a technology which is easy to adopt and that allows companies to engage with the data. Dan warns just investing in new system is not the answer; it needs to be married with great people and a clearly articulated set of processes.

Technology as a force for positive innovation

So can technology be used as a force for positive innovation? Steve Morris, the Procurement Festival’s Event Organiser believes it can. He stressed the importance of using technology in procurement to change organisations – in combination with good leadership. In answer to the question that many procurement leaders ask, “Why am I not considered to be a business influencer?” he says that procurement can earn a seat at the table by delivering broader value. Today, business is no longer just about driving out cost: it’s about growth, brand and customer revenue. Drawing the right people to procurement encourages good leadership as well as increased user adoption. 

In short, what were the event’s key themes?

Digitising procurement
In the desire to drive customer-focused procurement it’s important to connect the technology behind it. Data is great, but it has to be used to help customers (internal and external). When technology, data and the power of the customer’s voice is used intelligently it can drive value not just for the business, but also for those who buy the services or products that make business possible.

Different skillsets​​
While procurement was once about sourcing and vendor management it is now about using data and customer language to make positive change happen.

Ultimately, procurement is changing and any technology that is being used should be focused on turning procurement into a profit centre that adds value as well as enabling business growth and customer satisfaction. That’s why, at Basware, we use our combined strengths across procure-to-pay to help organisations get true visibility of their spend, while improving user adoption. After all, if procurement teams are looking to collaborate with more stakeholders the first logical place to start is by creating internal synergies with finance teams, so everyone can see the true cost of spend – and use that to change the conversations with suppliers from reactive to proactive.

If you would like to know more, read this related blog to learn three ways to give S2P roles a common set of tools and rules to create a united winning team or please contact us, we’re here to help.