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Business Challenges, through the eyes of Procurement - eWorld Report
A gathering of the UK’s eminent Procurement Professionals in one place is enough to strike fear into even the most hardened of sales people, so that might explain why London’s transport systems were a little quieter on 5 March during the bi-annual eWorld Procurement and Supply conference.
eWorld happens just twice a year, so this makes the event all the more valuable when there’s much to discuss during the most uncertain and volatile macro political and economic times we’ve experienced post-war.
It was clear from talking to the delegates that the desire for their stakeholders and colleagues to better understand Procurement is now more crucial than ever and those organisations who now ‘get it’ are reaping the rewards as a result. The perennial objective remains to improve the perception of Procurement as a force for transformation and improved profitability, reduce risk and enable growth.
As you’d expect from an event centred on technology in Procurement, AI and Machine Learning featured heavily again, but it was noticeable that there was more substance to these presentations than in previous times. Many focused on scaling back the rhetoric about technology and focused instead on the realistic, immediate opportunities to use technology to support procurement roll out and governance.
Novo-K exhibited this year and our objective was to gather information from the experts attending eWorld to ascertain the top challenges they face in the coming 12 months so we can share that with the market and help drive better collaboration.
Resource, Resource, Resource ... oh yes, and Brexit
Significantly, resource remains a key challenge and over 57% of procurement leaders and influencers say they don’t have enough people to deliver their procurement plans. This is a significant problem right now, when businesses need experienced procurement teams to help them with preparing for Brexit and governance is now high on the agenda. It is was also noted how expensive employing experienced procurement professionals has become.
Unsurprisingly, Brexit was featured high on most people’s challenges and trying to prepare for it was widely regarded as increasing costs, going against the grain of everything we ever taught ourselves about procurement. It will not be a shock to you that 65% of respondents do not have a clear plan for leaving the EU. Strikingly, the challenge was markedly different between larger, cash rich organisations who had made at least some plans for every eventuality they could anticipate, but for smaller and growing companies, this was not possible.
One company we spoke to had spent over £250k simply preparing for a worst-case scenario ‘Hard Brexit’ and, as he explained, there was no commercial benefit regardless of the Brexit outcome, they have simply had to spend the money to ensure continuation of trade.
Cost Reduction – if this hadn’t featured in our conversations, we’d be packing our bags by morning break. As important as ever with one notable exception: the attention to savings from efficiency gains is becoming a more recognised and important means of streamlining a company. When you combine this with mitigating risk and embedding governance to ensure regulation compliance, the idea of procurement being a part of the underlying DNA in a company is gathering momentum. Indeed, several people mentioned the importance of procurement helping to manage GDPR by baking it into the process and policies.
It was great to see so many procurement teams actively involved in business planning for their organisation, however, almost 53% of people surveyed say they are still not actively involved in budget setting for the fiscal. This is a significant proportion of businesses putting themselves at great disadvantage for financial planning. We didn’t debate the whys and wherefores on the day (that’s an article for another time), but the frustration was clear and if you’re reading this now, I encourage you to share this feedback with any stakeholder with influence on financial planning.
Once companies understand the value of engaging procurement with all budget owners in a company, those challenging targets for cost reduction become easier to scale, the need to make valuable resource redundant disappears and sales increase with higher profits than previous years.
Several of the seminars put the emphasis on people and the importance of recognising the role of the human being in procurement regardless of the software or systems in place to speed up or improve the end-to-end management of procuring services and leveraging the supply chain. Several speakers identified that the value of enhancing rapport with suppliers and the nuance of relationships is something that technology cannot (at least not yet) achieve by itself.
The increase of ethical and sustainable supply chain management is also becoming part of the vernacular used by companies to articulate their Social Responsibility and encouragingly 52% of the people we spoke to said their organisation was aligning with the UN Global Goals. Many businesses and charities now find this to be a positive way to engage customers, suppliers and employees with the community and, crucially, how that impacts both top and bottom line. You can check out the UN Global goals at https://www.globalgoals.org/ and on Twitter @GlobalGoalsUN.
The next eWorld Procurement and Supply is on 24 September 2019 and you can register for your free ticket at https://www.eworld-procurement.com/ it’s fantastic for your personal network and to drive procurement innovation in your organisation.
Novo-K is a leading procurement solutions company focused on delivering excellent results for SMEs, Enterprises and Charities/NGOs. If you would like to find out more, contact us today.