October 2018 |

Reality Checks for the UK

Last month I did the unthinkable. I went to a procurement conference where nobody mentioned Brexit. Nobody, niemand, personne, nikt. And not only was it quite refreshing, but it also allowed one to get a series of reality checks on the state of procurement today with a view on where we go by 2025. When you cut through the noise (most of which is about Tech or Brexit), as a profession, we are fundamentally thinking about the same things that we were a year ago. The supplier noise in the market place can be distracting; noise which is in the main geared towards getting a portion of the “Brexit budget”.

Before we get into it, I am not saying that Brexit isn’t the big issue of our time in the UK; far from it, you can read our Brexit series for views on that. What I am saying is that it was interesting to think about other things, look forward towards 2025, and take a reality check on our peer group.

Reality check #1:

We are not yet all as advanced as the market makes us think:

  • For every company thinking about introducing Chatbots to support stakeholders with assisted buying, there are thousands worried about getting basic capability and capacity.
  • For every organisation thinking about how AI will enable the next generation of procurement, there are thousands wondering how to meet their shareholder-committed cost reduction programmes this year.
  • For every firm introducing Blockchain solutions to their supply chains, there are thousands only starting to think about how to approach a more realistic level of risk management in the face of Cyber, GDPR, etc.

The reality is that the top 5% of procurement functions are way, way ahead of the pack, and the gap is getting bigger. They are able to do amazing things for three principle reasons. 1) They have vision, 2) they have taken their functions to a level of maturity whereby they are doing amazing things (compared to the rest), and 3) they have the budgets to appeal to the big tech companies. And the big tech companies have the big marketing budgets, so 5% of demand = 95% of marketing noise. Potential doesn’t mean possible for everyone.

Reality check #2:

So, what are organisations really doing to face up to the demands of today rather than the possibilities and potentials of tomorrow…. Here’s 5 things we see in the market:

  • Cost Reduction & Cost base transformation – savings or value, it’s all about doing smarter things with suppliers in pursuit of a business aim. This is still our core purpose, and it probably always will be.
  • Procurement Transformation – fact is most functions are still under staffed, under skilled, and doing too many of the wrong things. Businesses are starting to want a different type of commercial focus and support, helping procurement functions to re-focus, realign, re-skill, etc is a growing trend.
  • Risk Management – like it or not, there is a reason why we are surrounded by risk products. Its probably the real growth product in procurement tech right now. Businesses are looking to understand their risk profile and how to manage it. Social Value is on the rise, it could possibly even be a sixth theme, but I’ve put it here under Risk.
  • Upskilling to be smarter and more agile – whilst there is more talent than ever before, it’s not enough, and you either grow your own, or buy in external support, or as is more frequent today both. Training, coaching and best of breed hybrid delivery models are very popular, as is surge capacity (for things like Brexit for example)
  • Innovation and Collaboration – as businesses cotton onto the suppliers’ role in innovation and disruption, we are seeing the growth of collaboration and supplier enabled innovation. Amazingly, many large businesses are still slow on the uptake.

It’s not a massive leap to draw all this back to simple capacity and capability (assuming the tech is an enabler). But also solving business problems; cost, risk, growth, speed etc.

Reality check #3:

Don’t feel bad if you haven’t got your head around Blockchain for procurement (or other impending innovations that will each transform part of what we do). Most of us have more basic problems to address first.

As food for thought, at the non-Brexit mentioning conference I was at, we asked some simple questions, and got some simple answers:

  • >80% or respondents said that cost savings were their number one priority
  • Even more said that insufficient capability and capability was the number one problem they faced
  • 70% were able to manage and/or impact up to 60% of third party spend
  • Under 30% were using the standard procurement tools (e-sourcing, contract management, etc)

As I shared recently at a Procurement Leaders conference, most functions are on their own journey. A logical and sequential journey (you can read more about this on our Linkedin page):

Final Thoughts:

Don’t believe all the hype. Some yes, but not all of it. The future of our profession truly is amazing, but there is a lot of good work still to be done before we all become robots.

So for now don’t hand your head in shame if you have no idea how your Digital Twin is going to get you this years bonus for hitting your savings numbers. There is a lot of good transformative work you can be doing to impact your businesses objectives. And if you are focusing on that for now, with one eye on the future, you are in good shape and in good company.

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