Watch the webinar here
Hosted by Clive R Heal and Bill Michels, along with our esteemed guest speaker Pierre Mitchell, Chief Research Officer and Managing Director at Spend Matters. The session is titled “Embracing Digitization Purposefully in Procurement”, shining a light on the journey of digital transformation within the procurement industry.
Our hosts and guest will share invaluable insights on strategically adopting digital technologies, mitigating challenges inherent in this journey, and successfully driving a digital-first culture in procurement.
This session is an absolute must for procurement professionals, business leaders, or anyone curious about the digital revolution in procurement. Our esteemed panel will equip you with practical strategies and actionable insights to effectively navigate this complex terrain.
Read the transcript here
00:00:03.770 –> 00:00:31.470
Bill Michels: Welcome to our webinar presented by Lab and near AI. This is a thought leadership series, and our commitment to bring the latest to and latest technology and latest thought leadership to our audience. today’s topic is addressing digitization purposely, we’re all hearing about digitization. We should be moving to digitization. it’s a critical thing. Our our topic today is, how do we do that? And how do we do it with the purpose?
00:00:31.550 –> 00:00:43.930
Bill Michels: I’m fortunate today to have 2 expert panelists, Pierre Mitchell and Clyde Heel, and I’m going to turn it over to our panelists to introduce themselves. I’m Bill Michaels, and I’m a Vp at Lavender.
00:00:44.790 –> 00:00:54.760
Pierre Mitchell: right? Well, I just oh, sorry I I’ll just go over. I yeah. So this is up here much. I I run research at spend matters. I like to say we’re kind of like the best to breed
00:00:54.760 –> 00:01:16.860
Pierre Mitchell: mission of Gartner. We go but we go it. But you know, in particular, around procurement and and inbound supply channel things kind of procurement related. So we focus on tech advisory and market intelligence on the ecosystem of all the folks that want to sell into procurement and supply organizations and try to make them help get better, you know, make better decisions about how they use that capabilities. So
00:01:16.890 –> 00:01:29.220
Clive R Heal: thanks, Pierre, thanks, Bill. So my background. My name is Clive Heel, CEO of Lavender AI, and start off initially as a chemist at racket, or you, Ben Kaiser, worked in sales and marketing for a few years. It
00:01:29.270 –> 00:01:36.949
Clive R Heal: procurement in racket recognizer. Then consulting for Pwc. Actually same time as here. But I don’t think we work together. Pierre.
00:01:37.040 –> 00:02:03.960
Clive R Heal: then worked in procurement roles. I did that procurement for Europe for glacier, Smith Klein, of the Cpo. At Prudential, in the Uk, and then join Genentek Roche, and for the last, whatever 11, 7 and a half years at at Roche I led the Innovation Center. And then, since 2,018, I’ve done my own thing with different areas, and including Lavender AI, where we are now, and great to talk with you guys.
00:02:04.300 –> 00:02:27.629
Bill Michels: Great, I’m gonna I’m gonna address my first first question to Pierre Pierre. I I know that spend matters. Does a lot of evaluations of systems and helps people identify what? What kind of technologies they need to do? So I’m going to address on this one to you, which is what are the emerging technologies that you foresee playing a significant role in procurement supply chain as we move to a digital
00:02:28.400 –> 00:02:44.449
Pierre Mitchell: yeah, I mean, we get, I mean, there’s just basic technology of just getting good old process automation, especially on repeatable tasks and getting people a lot of doing stuff that really adds no value. That’s really expense rather than really investment, because the opportunity cost of
00:02:44.450 –> 00:02:58.569
Pierre Mitchell: a procurement person’s time is higher than really almost anybody else in the organization. Right? 5 x, if you’re doing it right. 10 x. So you know, just getting out of that of of of the transactional stuff this season. We can. We can talk about that. But
00:02:58.570 –> 00:03:07.340
Pierre Mitchell: I mean, obviously, I think the bit the biggest you know. Trend that’s happening right now is our AI and generative AI and Chat Gpt has captured everybody’s attention.
00:03:07.340 –> 00:03:27.500
Pierre Mitchell: I’m a bit of an old it guy. I actually coded systems, you know, 25, almost 30 years ago, including some expert systems. And the topic of AI is one that’s been around for a long time. It’s just that. Now we finally have the horsepower with machine learning and some of the new technologies to actually bring some of these things to to bear. So I’m certainly
00:03:27.500 –> 00:03:56.629
Pierre Mitchell: AI is something that’s really critical. A lot of people like like, Wonder how am I actually going to use this right, you know, in terms of do I have to build these machine learning models myself? The good news is that you know a lot of the providers that you’re using. They’re the ones that are kind of you, you know, taking the AI and using that to deliver next gen technology and services, analytics and market intelligence and all these things so that you don’t have to go and, like, you know, build your own mission machine learning
00:03:56.730 –> 00:04:13.499
Pierre Mitchell: machine Learning library. But I mean, I would say that that area around using AI to manage and model and deploy knowledge and intelligence and collective intelligence is probably the most you know, game changing thing rather than just process automation.
00:04:14.140 –> 00:04:15.030
Bill Michels: 5.
00:04:15.270 –> 00:04:38.570
Clive R Heal: Yeah. I agree with that in terms of Rpa machine learning doing the transactional side. I think blockchain has still has a way to go in terms of the opportunities for blockchain to really help us really understand what’s going on and obviously manage the the supply chain, raw material deliveries that sort of thing. Generative AI, of course, which is coming everywhere. I think it’ll be right across the whole
00:04:38.570 –> 00:04:51.350
Clive R Heal: procurement. Okay, on my landscape. I think those are. Those are the big ones at the moment. So it’s really about, you know, what’s in your tech stack? What’s it? What’s the your digital roadmap gonna look like which technologies to bring in.
00:04:51.370 –> 00:05:05.950
Clive R Heal: And I think that’s the complexity. It’s not the. Now. There aren’t solutions. There are lots of solutions. I think the complexity that we’re seeing with the emerging technologies is which one? When what’s right for me? How do I? How do I align that into my roadmap, and so on.
00:05:06.560 –> 00:05:21.079
Bill Michels: So follow up question on that for both of you. What what would you say to people that are in a transaction or a tactical function within the supply chain or procurement area. if if everything’s moving toward robotics
00:05:21.980 –> 00:05:30.879
Pierre Mitchell: well, I mean, I’ll start and then try to set up Clive here to kind of give. You know, not know that it works in theory. Let’s see if it works in practice. especially, you know, giving you guys cumulative
00:05:31.030 –> 00:05:53.179
Pierre Mitchell: backgrounds. I think the the biggest thing is having an overall digital, you know, digital procurement, strategy and architecture. And just know how this stuff all hangs together, because just I know it’s very simple. But it’s just basic governance. I do. Who is the senior, most person in procurement that actually is responsible for creating the digital strategy on how we hang these things together. So that means just
00:05:53.180 –> 00:06:17.210
Pierre Mitchell: the base basics of, do we have good process definitions. Do we have a good kpis or on what we want from these systems? How do we manage the data around it? What is the governance around the data, the master data. How many supplier masters do you actually have littered across your enterprise? Are the vendors that you’re choosing that supposedly may have just supposedly one supplier master. Oh, gosh! You know they they’re bringing 5 or 6 just under the covers based on the acquisitions
00:06:17.210 –> 00:06:41.019
Pierre Mitchell: that they’ve done so just getting your house in order around process and data and the tech apps and working with it shockingly as a partner. There should be no shadow, it or shadow procurement happening between the it and procurement organizations. They have got to get together right, because this is just because the jointly they have to to work together. So I think getting the house in order will help, because those you know giant spider charts, or
00:06:41.020 –> 00:07:09.719
Pierre Mitchell: you know, tech tech ecosystem charts. That’s just not helpful. Right? That’s just like chaos. I mean, it’s good news, right? Trust me, welcome to my nightmare of understanding everybody in the ecosystem, what they do and how you use them. But you have to kind of get your own internal house in order a little bit. If you’re gonna really start using some of the more advanced things. Otherwise it’s just, you know, tech Dujour, I’m sure you guys see this in folks using a lot of the tech that you guys have, which is super sophisticated. So I’d love to get your guys thoughts on it.
00:07:10.580 –> 00:07:38.090
Clive R Heal: Thanks, Peter Bill, when you particularly said I think at the start of your question about if you’re on a transactional operational role, I think if if that’s where you are right now, I think your your role is going to change or potentially go. You know, Rpa, machine learning is gonna ultimate that. And and actually, quite frankly, I think that’s a good thing for a procurement. You know, we’re not here, really to place purchase orders. We’re here really to create value for our business and meet the business needs and deliver deliver value
00:07:38.090 –> 00:08:00.909
Clive R Heal: beyond that as well. So you know, things. Things are. Things are changing in terms of you know what the technology that’s coming along. The role is going to change. I think I think that’s actually a good thing, you know. If you if you think about it, back in 2,003, I was at a sips event, and I I stood up and said, I think procurement are only 10% of where we’re going to get to ultimately. And people like
00:08:01.190 –> 00:08:02.670
Clive R Heal: what the heck does that mean?
00:08:02.730 –> 00:08:13.529
Clive R Heal: And actually, now, I only think that we’re maybe 70% towards where we’re ultimately going to get. So the technology is really accelerated to our our, our our speed to our destiny.
00:08:13.660 –> 00:08:33.759
Clive R Heal: But there’s still a long, long way to go. So you know that the the candy is in the store now, but until you start until we start deploying it, utilizing it, leveraging it, really benefiting from it, you know, that’s when the value comes, and that’s when procurement can take another step up from where we are right now. But for sure we’ve moved on in 20 exactly 20 years from
00:08:33.830 –> 00:08:36.280
Clive R Heal: from what I said, the 10% quote. So
00:08:36.460 –> 00:08:44.830
Bill Michels: I I and I’m thinking that people are going to need to upscale and decide where they want to be in the future, Pierre, you got a comment.
00:08:44.860 –> 00:08:56.899
Pierre Mitchell: No, no, it’s gonna say, it all depends on how you view digital to right. If you just look at digital as digitization straight up. Automation of your old school procurement services of just, you know, doing deals. And you know, pushing Po’s
00:08:56.960 –> 00:09:20.729
Pierre Mitchell: that that’s a pretty narrow little box. That’s that 10, right? But when you start saying, Well, how do we actually orchestrate? an optimal supply base and supply chain that’s going to, you know. really serve the business. How do we externalize and manage that whole third party ecosystem? Well, well, there’s really no chief externalization officer that’s out there. Great, we have a Cdo around digitalization. But what about
00:09:20.750 –> 00:09:44.970
Pierre Mitchell: external when you frame, you know? Next, Gen kind of supply management and and managing the the the. You know the supply chain in that way. You’ve now just opened up the solution space, you know, 10 x. So there’s more opportunities. But just so much more complexity and challenges and managing all the the digital tooling around that around digital twins. And how do we model the whole things? And how do we see into that? And
00:09:44.970 –> 00:09:58.489
Pierre Mitchell: right, it just gets a lot more complicated. And you’re gonna have to elevate your game to go and and get that, you know the hiring and fruit there, you know. But if you’re just viewing as Hey, I’m just going to make these repetitive processes like I said.
00:09:58.490 –> 00:10:23.020
Clive R Heal: you’re not staying ahead of the algorithm, and your future is not looking good. It’s, I think, is a train pier. I mean, the train is going faster and faster. If you step off now it’s gone right. You have to stay on the train and keep keep on the train. And and the generative AI is actually causing the train to go even faster now. So it’s a it’s a it’s a roller coaster, it’s a it’s a fun ride right so. And you know, with a roller coaster like this, times when you’re having fun and
00:10:23.050 –> 00:10:36.380
Clive R Heal: times when you’re, you know, be scared sort of thing terrified. Yeah, that’s me. I’m holding the rail. You guys are segwayed into an audience question, which is, what happens to companies that don’t adapt.
00:10:37.820 –> 00:10:51.019
Clive R Heal: I think they’re doomed. I am so sorry period interrupt. I actually think they’re absolutely doing the the technology asteroid is going to destroy the procurement dinosaur. And that for me, is a good thing right? So it’s like you got to adopt it.
00:10:51.020 –> 00:11:12.489
Pierre Mitchell: You gotta adopt it and and move on if you don’t, others will. So yeah, no, no, I absolutely. I mean, this is kind of hey? I’m a University of Chicago, you know, business school grad. So markets are generally efficient, and the Invisible Hand will kind of work things out. The question is this, do you want to be part of that invisible hand, you know. Be the hand or the one that gets slapped by the hand, right? So I think in.
00:11:12.490 –> 00:11:31.979
Pierre Mitchell: you know, in in in that sense you have to be kind of a master of your digital destiny. The good news is that the supply markets are getting so much more digital and some more capabilities are coming online that you can really, if you do it well, right? And this is kind of where we spend a lot of time working with folks is you can kind of get a lot of the tech
00:11:31.980 –> 00:11:55.280
Pierre Mitchell: as a service, and be able to build your capabilities and bring it to bear and have that, you know, that. Bring that magic into the organization and actually be like, Wow, procurement. You’re actually practicing what you’re preaching. You’re bringing in some cool stuff we didn’t even know about. You’re going to be at the table versus. Oh, you need to follow our in step process to get this, you know. Deal. Sign your your toast. If you’re going to be in that operating model.
00:11:55.380 –> 00:12:17.030
Clive R Heal: It’s kind of exciting here. The number of companies now that have a head of procurement, trans transformation, head of procurement, excellence, head of procurement value creation. These new roles which weren’t there maybe 3 years ago, is good to see companies putting in people to drive the whole area because it’s a different competency. So different skill set. It’s different
00:12:17.030 –> 00:12:32.960
Clive R Heal: experiences that you need to have to really understand how that’s gonna impact your business and the opportunities and the selection, because the candy shop now is so big compared to nothing. 10 years ago, apart from maybe Sip and a couple of others right, the candy shop is so big, though you know you could.
00:12:32.960 –> 00:13:01.310
Bill Michels: you could choke on everything this out there. So you got to choose wisely right? I I’m I’m gonna follow up on this question with the you know, the people that are sitting out there listening and and saying, well, for for a long time procurement has not been a place where management will invest. how? How do they make the business case? How do they put together a business strategy to to really take it to the take it to the boardroom and get the kinds of kinds of expense and and kinds of help that they need
00:13:01.310 –> 00:13:03.879
Bill Michels: to start getting some additional process.
00:13:04.430 –> 00:13:15.640
Pierre Mitchell: Yeah. Well, you know, you can kind of say, well, it kind of comes from the top right? And it should be well when you don’t have that from the top, you have a leadership void, right? And you have to fill that leadership void. And you’re going to do that
00:13:15.690 –> 00:13:21.929
Pierre Mitchell: individually right. Are you going to try to do that collectively with peers you can find in cohorts within the organizations to kind of
00:13:22.010 –> 00:13:51.080
Pierre Mitchell: create that ground, swallow access the self funding kind of projects, right? The being able to category by category, knocking down, you know, and showing what you can do, adding more value. Try, you know, just like hitting all the broader kind of value levers beyond just cost savings. And obviously, that’s really, you know, Key right now. But you know that is a transformation that honestly, it takes a lot of time, and it is that internal resistance to change that can be one of the most frustrating things that ultimately drives
00:13:51.080 –> 00:14:07.319
Pierre Mitchell: next Gen. Talent out of the organization. So at some point, you almost need to cut your losses. If you’re gonna if you’re one of these. you know, net next gent folks and go find an organization that’s gonna appreciate you and give you the the opportunity to flourish, to use new tools, methodologies, training
00:14:07.320 –> 00:14:24.599
Pierre Mitchell: and do it. And you know, it’s it’s both top down and and bottoms up. But it’s a it’s a challenge. It’s it’s Clive, I mean. And, Bill, you guys chime in on this one. I’ll give you my simple answer for this this bill in terms of how to develop the business case to implement technology.
00:14:24.600 –> 00:14:40.029
Clive R Heal: My answer would be, ask the procure tech company to give you a business case. I mean, if you think about it. They’ve implemented their product in multiple companies. They’ve seen what works, what doesn’t work, the value it brings. I mean, Bill, you’re working yesterday for an airline on
00:14:40.040 –> 00:14:52.209
Clive R Heal: on the of helping them with their business case. Right? So it’s it’s it’s talked to the procure tech company demand. They give you a a business case that that you can maybe tailor appropriately to your business. But
00:14:52.210 –> 00:15:22.039
Clive R Heal: you know, ask them for as part of their product offering, right? Okay, I’m interested in your product. You give me a business case that I can take to my business. You fill in as much as you can. I can fill in some of the some of the blanks, but but you leverage their understanding about their product and what it brings the and they need to be honest in terms of like, you know, how many resources is it going to take to implement this? How long is the is the is the training process? How long the whole on boarding for everything whatever. So they need to be honest in that. But
00:15:22.080 –> 00:15:30.400
Pierre Mitchell: oh, yeah, I’m gonna have to call an auto on a time out on this one, Clive. So yeah, let me let me just put a caveat on that one. Right? So certainly
00:15:30.410 –> 00:15:52.169
Pierre Mitchell: the value calculators and the the the the models that that that hopefully the the the vendors have are a good starting place around building the business case right? certainly they’re going to have those that are favorable to their own, you know competencies. And so it is good to get independent arbiters of who can help with this. And I I. I’m not going to do a
00:15:52.170 –> 00:16:11.810
Pierre Mitchell: too much of a plug up. But like we have this thing called tech match, which helps practitioners really go through the kind of 150 digital capabilities, and they can wait them. And all this stuff. And what’s really important to you around your biggest gaps, and then, dynamically, you can get all the heat maps and see how all the vendors compare, and whatever, and then associated with those capabilities are a set of kind of.
00:16:11.810 –> 00:16:30.500
Pierre Mitchell: you know. business value metrics. Now, that’s kind of like making sure that you get all of the the value teased out of it right that way. What you can do. The question is, then on the actual benchmarks of what you’ll actually realize that one’s gonna be a little squishy. It’s gonna tend to be more favorable for that. The providers obviously are gonna put out there. And you gotta
00:16:30.600 –> 00:16:47.340
Pierre Mitchell: challenge him a bit, right? Because otherwise it’s like, you know. you’re gonna have the vendors paying you money right now. Versus you, you, you know, generating savings. So I would say that it’s absolutely fair. Just be, you know, just know that there’s gonna be some bias right in terms of the data that you’re gonna get.
00:16:48.300 –> 00:17:20.979
Bill Michels: Sure I’m I’m I’m thinking that you know, they they really have to. to build a a a case where they have to look at what has been the investment. And then what kind of what kind of collaboration can they get in the organization? Ha! How can they should take small steps? I should start with, you know, cleaning up the data they should start with looking at. You know what’s good, the automating, the data, the the old adage of I I want to pay for head. I want the head count to go away.
00:17:20.980 –> 00:17:45.980
Bill Michels: When when you get a system it’s still there. People still look at how many heads are you gonna drop? So I think we talked a little bit about the process automation. And that’s definitely going to deliver you head count. It’s definitely going to give you more efficiency and make you more productive. But you have to really create the the the business case and a new organization that’s gonna drive the strategy and and the cash
00:17:45.980 –> 00:18:14.099
Bill Michels: categories to a new level. So I think building a building a business case, starting small, starting with the things you could do. Building your business. I think initially, I think long term, you could build the case on value, and you could build a case on competitive disadvantage. I think you know you could say you’re going to be a compet competitive disadvantage if you don’t do this, but that that’s not enough, and set up so initially to do this, you’re going to have to build a business case. It shows return on investment for the thing, and I think
00:18:14.100 –> 00:18:28.590
Bill Michels: management might be jaded, because over the past they put in these Erp systems. And I, I recently went. We went with a company that was looking at an Erp system or changing their system. And you know, they they they thought it was gonna cost
00:18:28.720 –> 00:18:51.080
Bill Michels: 5 billion. And it’s gonna cost a lot more than that they thought it would take a year. It’s gonna take a lot longer than that. So I think, what what what happens is, you know, those those have jaded management. So you have to come in with a small program. It’s definitely gonna deliver on time the kind of head count you want. And then from there you could start building on. You get you gotta get credibility first. You have no credibility. When you go into the boardroom and ask for money.
00:18:51.290 –> 00:19:17.679
Clive R Heal: Well, the one thing I’d say is, this is the time for procurement to be courageous. You know fortune favors the brave. Okay? So I don’t think that typically procurement. People are courageous. I don’t think they’re willing to step up, but you know, above the parapet and and do something that’s bold and different. But now is definitely the time to do that again. If you’re not going to do it now, there’s no point, because the opportunity is there right now. So it’s like.
00:19:18.080 –> 00:19:40.590
Clive R Heal: it’s all about in my mind. It’s about prioritizing what you do first. Yeah, it’s not. It’s not. It’s just obviously the what cap capability you got? What capacity you got? What business needs have you got to? Are you trying to address? What ballet are you trying to trying to find? Where do you do it, I think for me when you’re looking at your technology and what’s going to be in your roadmap and the sequencing of that?
00:19:40.950 –> 00:19:50.680
Clive R Heal: You gotta be putting in the basics first assume everybody’s got well. Most people have the, you know, the cure to pay basics in. Then you gotta be looking at technologies which really go across
00:19:50.740 –> 00:20:10.280
Clive R Heal: your business in terms of hitting the most number of categories, hitting the most number of people. I think the third wave, which is already arriving now is where you we’re going to start. See? A lot more category specific technologies. Okay, so this is just for marketing. Spend. Only this is just for your travel. Spend. This is to manage your tail, spin, or whatever. So
00:20:10.390 –> 00:20:28.459
Clive R Heal: I think we’ll start to see those. We’re obviously seeing them already. But it’s about what what’s gonna give you the most bang for the bang for the buck. And what are the resources to to implement? And that’s that’s an important question. Right? Have I got the capability and the capacity to implement this? Yeah, what is the Roi? But can I do it? How long is it going to take.
00:20:28.460 –> 00:20:43.339
Pierre Mitchell: because there’s just too much in the candy store right now.
00:20:43.340 –> 00:20:59.310
Pierre Mitchell: Just do a diagnostic overall of where is procurement right now? Right? So I used to work at the Hatchet group I mean the Hacket group, and they, you know, quite often. They were very focused on, you know, body counts and efficiency and all that stuff. But if you haven’t gotten to the point in your organization where you can translate.
00:20:59.330 –> 00:21:22.080
Pierre Mitchell: hey? You know the time that I free up, you know, and and the under investment in procurement means this amount of risk and this amount of lost opportunity. Right? So if you have, I was just talking to someone at a conference this week. It’s poor woman, you know. She’s like she’s managing 400 million dollars in spend with like no no tools. That is a material risk to the business. Right? If you are not investing in basic
00:21:22.080 –> 00:21:33.399
Pierre Mitchell: spend management supply management capabilities, how am I going to get, and that is like this, the the result that is kind of like the net net of the delight. Cpo report. I’m a been a co-author on that the last 3 times it just came out.
00:21:33.400 –> 00:21:54.609
Pierre Mitchell: and Cpos, you know the biggest up. They’re overwhelmed right? How do I try to add more value when I’m still mired down on all the old crap right now. I’m trying to build all these new capabilities and going deep and going broad. See an end to your network all this stuff, you know, you can’t get there unless you have you using digital as a force multiplier to help you versus create additional
00:21:54.610 –> 00:22:06.219
Pierre Mitchell: complexity, and just throw in more spaghetti apps at the wall and creating a huge, you know, cobweb of stuff that doesn’t hang together is not helpful, just as going with an old school. Erp
00:22:06.220 –> 00:22:32.250
Pierre Mitchell: is not necessarily going to be, you know, helpful as well. So I’d say, do the diagnostic get your house in order around. You know what is the opportunity. Size the prize, and if you can’t get management, you can make the case on where procurement can really go, you know, to really seize that prize. Then you’re gonna have a hard time, and digital is part and parcel of doing that rather than just automating the cow paths. It’s fundamentally.
00:22:32.250 –> 00:23:01.580
Bill Michels: how do we use that to get 5 x 10 x improvements in a function that is 5 x 10 xri. So it’s a hundred X. No, yeah. Well, you know, I’ve done a lot of transformational change in my life, and I went to one the indirect side of one of the automotive companies, one of the big automotive companies. And they had a A 11 people managing 10 billion dollars in spend. Of the 11 people, 9 people doing the transactions, leaving 2 people to do the strategy for 10 billion and spend.
00:23:01.580 –> 00:23:26.580
Bill Michels: And so really, we, we we basically said, you have to invest in people you have to invest in systems the bus. But the one thing that really got management’s attention was when we built the benchmarks we built, you know. Here’s what the other people in our industry are doing. Here’s what best, and you don’t want. We want to look in your industry, or what what’s best practice, and you and people will benchmark with you to kind of give you the data. I tell you what they’re doing on the digital.
00:23:26.580 –> 00:23:48.899
Bill Michels: And then once you can build a business case on, here’s how far behind we are. Here’s the gap between best practice. Here’s the gap where we are. And then here’s the plan to close the gap. Normally, management will look at that, and they’ll they’ll build a a process to help you do it, and they’ll give you the money to do it. But I think you need to. You need to actually get those benchmarks and figure out, where are you at?
00:23:49.810 –> 00:24:03.610
Clive R Heal: I think we step back, Bill, and look at the value of digital for procurement. I mean, obviously, you’ve got, you know, the value, the efficiency, the customer service improvements that you’re writing in your in your business case.
00:24:03.670 –> 00:24:06.460
Clive R Heal: But I think there’s a couple of other factors for me. There’s
00:24:06.800 –> 00:24:32.699
Clive R Heal: the the the technology is helping us really understand what’s going on. It’s really helping us understand our business, understand our supply markets and related to that. I think it’s the if the opportunity to create new value new opportunities through the insights from the information that that we’ve got. So it’s not just about value efficiency, customer services about, how do we really, truly understand what’s happening?
00:24:32.700 –> 00:24:58.549
Clive R Heal: And the you know, as I said before, first, the insight to be able to use the technology to identify opportunities that our competitors otherwise would not spotted, or at least we spot them first and and could tap into them first. So it’s the opening up the. It’s it’s like the secret key, if you like. That was another door that you gives you the opportunity pathways that maybe you hadn’t thought of before hadn’t existed before. So it’s it’s a, it’s a complicated.
00:24:59.050 –> 00:25:03.260
Clive R Heal: It’s a complicated elephant in terms of digital technology.
00:25:03.440 –> 00:25:22.510
Pierre Mitchell: What do you think about benchmarking? Sorry about it is, it is just there. Are you just benchmark it? What what other functions have gone through? And you can learn from them? Right? So the quality management 30 years ago. Qualities there, I must get myself involved, 100% influence on the line. So I can do this myself with my own resources.
00:25:22.510 –> 00:25:46.739
Pierre Mitchell: What actually ended up working out is, we’re gonna train you all to be lean. 6 sigma, you know, experts. So you can build quality into your own processes right? And guess what? The quality organization got much smaller. But they got much more kind of high impact. Think about it, right? Which is, we are going to democratize and give you the ability through analytics and low code and your own workflow. And all this with some governance, so that we don’t have
00:25:46.740 –> 00:26:16.690
Pierre Mitchell: Sharepoint, you know. you know, not nightmare of sprawling up a million systems. Don’t don’t talk to each other. I you got some, some some governance around it. But that idea of democratization giving people the tools and unleashing that power right? It has got that lesson. Even. Hr, good old Hr. Their thing is all about automated self service. I don’t want to do that. I’m just going to serve it up to you in the portal may not be the best, but gets me out of the loop right? And now I can start hooking up service providers and give you better and better and more.
00:26:16.690 –> 00:26:19.670
Pierre Mitchell: you know self-service. Every function
00:26:19.670 –> 00:26:34.880
Pierre Mitchell: is kind of going through similar transformations, and procurement is kind of like the sum total of all these things right? Because it’s you know it. It. It touches on all these different functions. So it’s good to learn from what others have just gone through and apply those lessons
00:26:34.880 –> 00:26:59.999
Clive R Heal: to your own. you know, transformation and what you do. I think it’s a good point, pair. I think the whole self-service thing is is great. The danger might be that the AI becomes so good that they don’t need procurement, they could do it themselves. And so that might be. That might be the ultimate destiny. But but so so how do we stay ahead of the AI? How can we create and bring value beyond what the technology is capable of doing
00:27:00.020 –> 00:27:18.230
Pierre Mitchell: about smart supply markets. Right? This is where we can be like, look, do you want to use some provider that’s going to build this next? Gen. AI, and it’s all going to be in a black box, and you have no clue how it works. And you’re putting all of your, you know, collective and community intelligence into this into this thing.
00:27:18.230 –> 00:27:30.530
Pierre Mitchell: Good luck! If you thought it was hard pulling out your own masturbate and transactions to bring that that portable to take it to another system. How do you do that with an AI, you know. with an with an AI knowledge base
00:27:30.530 –> 00:27:46.959
Pierre Mitchell: and make that portable, you’re gonna be screwed right? So you have to be really smart and working with it on the business to say, How do we get the the power of that? But also make sure it’s something that doesn’t box us in and allows us to bring that internally, so that we can bring
00:27:46.960 –> 00:28:06.300
Pierre Mitchell: the rules and the knowledge base and these things over. So that as technology shifts and guess what it’s gonna shift, it’s a frigate. It’s a chaos land. Grab out there with the hyper scalars, and you know, and all the mega append, there’s not even just the best of breeds, right? So it is really daunting right now, even for a tech analysts like like me to kind of understand
00:28:06.300 –> 00:28:20.070
Pierre Mitchell: what the heck is. Actually, you know, going on so being smart about how you embrace this stuff. And you know what? If it puts you out of business? Great, it means you can move on to another category, a new level of value move to another
00:28:20.070 –> 00:28:42.000
Clive R Heal: organization, right? You’re gonna have to upscale yourself, anyway. So you might as well disrupt yourself. Put yourself out of business. And then, you know, just let it happen to you with an old skill set. So it so it’s back to the maybe 82 is not the right ratio anymore. It’s back to the 820 in terms of you know. Where do you spend your time? Where can you create the most value? Where do you not want to even participate in that. You don’t want to be involved in the
00:28:42.000 –> 00:28:54.570
Clive R Heal: in the stationary contract. Right? That is not going to change the stock price that is not going to help our customers. Right? So where is it? Where is the point where we need to inject? And if you think that’s actually a really important question.
00:28:54.570 –> 00:28:55.870
If you can inject
00:28:56.130 –> 00:29:19.379
Clive R Heal: resources or innovation in all of our processes that we have in procurement right? We need to think through which is the step or steps in what we do or should be doing where we have the biggest opportunity to create the most value. Right so. And and and if you think about that? There’s maybe 2 or 3. I would always say that the whole strategy creation step, you know, when you’re
00:29:19.380 –> 00:29:31.720
Clive R Heal: when you’re doing your category strategy. You’re coming up with the different options. If that, if you can really be innovative in terms of what your stretchy says and where you want to go. I think that’s a potential to to create, to create a lot of value.
00:29:31.720 –> 00:29:59.659
Clive R Heal: I also think there’s a lot of value opportunity in the way that the way that you connect and interact with your supply base as well in terms of the ability to influence the suppliers, to get them aligned to you, you know, even if they just been one of their R&D supporting you, you know, that’s that’s great, because they’re working on products and technology or services. They’re going to support you. So that’s another area where this is an area. We want to put procurement, thinking procurement expertise, because
00:29:59.660 –> 00:30:04.380
Clive R Heal: if we can turn that up, even one. It’s back to your 10 times value. Peer.
00:30:04.680 –> 00:30:26.379
Pierre Mitchell: Yeah, no, it’s great. I mean the fuck that the the 2 functions, by the way, didn’t Bill. Sorry what that is is kind of the although lessons from all the functions is R. And D, you look back at P. And G, and and, you know, connect and develop and say, let the innovations happen outside the 4 walls. Let’s bring that in. Great. What’s our procurement process to do that. And you have been in on the forefront of this honestly at erosion.
00:30:26.380 –> 00:30:49.690
Pierre Mitchell: are on kind of supplier innovation, and really great. All the suppliers are putting all this money into innovation, and how they’re going to help buyers. You are the buyer. So be a good buyer, be a customer of choice, be a way to. That’s not just going to screw them over, you know, at right now, especially now, when markets have kind of gone a little bit south, and a lot of the categories. Is this the time to kind of go get your come up and’s and you know, get your money back and screw them over without. No, this is actually the best time
00:30:49.690 –> 00:30:57.520
Pierre Mitchell: to do some of that, but also now really be a customer of choice, and say, great, how do we work on the long term. So R&D, the lesson around externalization
00:30:57.520 –> 00:31:23.939
Pierre Mitchell: and finance the lesson around everything must tie back to value. And how do we improve our brand multiple. How do we improve revenue? Anything that it increases enterprise, value, and decomposing that any lever is a valuable lever? How do we find the best place to focus our money, to reduce risk and maximize value. That’s what finance is going to be interested in. And you should also be interested in, because that’s the way to prioritize all this stuff
00:31:23.940 –> 00:31:51.190
Clive R Heal: here. I just love the customer choice phrase it. For me. It’s like everybody thinks they are, and nobody. Maybe only one is right, but I just love it. Is that the whole concept of oh, I’m the customer of a choice, right? It’s like, well, maybe you are suppliers, said we were as the suppliers like roll in their eyes. Oh, yeah, you’re going to get the best innovation. Sure, you know, they’ve said that to 10 other customers, of course, is hey? I worked in sales for 3 or 4 years. I know what
00:31:51.410 –> 00:32:20.509
Bill Michels: I know it’s up for. You get. Every customer has to be important. I’ve got a couple of more questions, but I want to remind the audience we’ll take questions at any time. So if you’ve got questions, pop them in the and the question and answer box, and we’ll we’ll be happy to answer. The the next question is going to be? How? How? If you’re sitting in a role in procurement and supply chain now? And you’re starting to see digitization? What skills should you have? What? How should you change your skill set? What should you do?
00:32:21.570 –> 00:32:42.259
Pierre Mitchell: Wow, this is a big one. Yeah. I mean, this is actually something we wrestle with, because, you know, we see a lot of digital kind of training curriculum and and competency development and things like that. And I think there’s a lot of good meat and potato stuff. You know, around, just understanding what technology can do around the types of systems, the value that they have getting educated right about
00:32:42.430 –> 00:33:10.679
Pierre Mitchell: Erp and source to pay suites and individual applications, and how they all work. And as you do that, you also then have to understand what’s under the hood of it. You have to understand analytics. You have to understand a little bit about, you know, software as a service and and and and and and and technology. But I would say, probably one of the biggest areas that you can learn about is learn about data and analytics so independent of the machine tools that are being used
00:33:10.680 –> 00:33:26.500
Pierre Mitchell: to. You know, automate your processes and and whatnot really learn how to perform analytics and to use different types of tools and techniques certainly learn about, you know
00:33:26.500 –> 00:33:54.599
Pierre Mitchell: AI and machine learning, and maybe get your hands dirty with a few things there. But I would say out of all the areas. I’d say the biggest thing is analytics is probably a great area, because you could just start with excel. And then, you know, migrate to more and more sophisticated kind of analysis. So get smart on how analytics can bring a lot of value to procurement and to the broader business and enable that but also, yeah, be smart about kind of the tools and and the market, and how they can kind of help you. So.
00:33:55.010 –> 00:33:58.600
Clive R Heal: Bill, I think think with AI prompt master
00:33:58.690 –> 00:34:22.360
Clive R Heal: in terms of the ability to create the prompts which actually give you the insights to other people won’t have generated using the same generative AI technology. So it’s all about the prompt and prompt master. But but for me, moving away from the technology, I think it’s about the the human capability. Right? So the AI is going to get better and better.
00:34:22.760 –> 00:34:24.840
The ability to really connect
00:34:25.070 –> 00:34:37.189
Clive R Heal: empathically with the business partners, with the suppliers to create the understanding and the relationships that the technology is not yet able to do. And therefore.
00:34:37.190 –> 00:34:55.329
Clive R Heal: you know, if you can, if you can win the hearts and minds of the business partners of your suppliers. You then got the opportunity to create new value right? And and and Pierre mentioned the word, the word trust as well. I mean, you know, commercial trust, and the and the human relationship, I think.
00:34:55.360 –> 00:35:15.959
Clive R Heal: is going to become more and more important. So it it almost suggests that there’s going to be different types of procurement people. You know, we work in that. We worked in an environment where you know, you could do indirect and then move over to direct. And you use the same sort of skill set. Okay, so different. Spend category. But I think we’re going to start to see there’s going to be some competencies which are
00:35:15.960 –> 00:35:28.609
Clive R Heal: which are required for core procurement people. But you’re gonna have the digital people as well helping drive it, so it won’t be, you know. Everybody in procurement looks the same. There’ll be a diversity of diversity roles if you’re in a procurement role.
00:35:28.940 –> 00:35:45.960
Clive R Heal: I think you got a as as pure right? The course said, understand the technology. And how do you leverage it? He talked about data and analytics. But for me, it’s how do we build and strengthen the human side of what we do. So yeah, it’s moving to
00:35:45.960 –> 00:36:08.889
Clive R Heal: now. a customer customer strategy is rather than category strategies. Yeah, what’s the what’s the strategy for this customer? Because we we we can. We can get you value here here in here. Here’s some of the opportunities here. So here’s some of the some of the race. So making that everything that we do in the future human centric and the human centricity of our plans, of our actions, of our solutions.
00:36:08.890 –> 00:36:37.829
Clive R Heal: so that it focuses very much on on the human being that is the supplier that is our. That is, our is our business partner, because there’s no doubt if you have a great level of trust with your business partner, with your supplier, and they they’re willing to support you. You can do great things right? So you you it’s back to the that. What drives people in a way, you know, you’ve either got the burning platform right shit. We got a jump right because his upper on fire, or
00:36:37.980 –> 00:36:55.429
Clive R Heal: great a compelling vision for them like they want to work with you. They want to move forward with you because they are inspired by the vision that you’re creating and the opportunity. And if they have, if they have to trust in you, they are willing to either jump because they have to, or actually follow you along that volume along that pathway so
00:36:55.430 –> 00:37:08.059
Clive R Heal: so procurement already, like the the The, they, they shining, the value torch in terms of where opportunities might be, and they have to ensure that the business is able and willing to to, to to work with them as well.
00:37:08.330 –> 00:37:34.169
Bill Michels: But I have 3 points, because I do. I’ve done a lot of training and development over the years. And one of the things that I and getting to your point, I’m human the human touch. you. I’m I’m new with La. And of course we have an avatar that will negotiate with people, and the big question you get is, will will will I be replaced by the avatar, I think, on the low level spend. So it’s going to be certainly.
00:37:34.170 –> 00:37:51.170
Bill Michels: robotics that’ll help. But do the low level spends stationary. But I think when you get to some of the big spans, when you have hundreds of billions of dollars or 50 billion dollars you’re you’re not going to turn that loose on on on an AI bot. And the one thing that Pierre said
00:37:51.170 –> 00:38:15.519
Bill Michels: by probably pick this up 10 years or 15 years ago, and he just made a statement. And it was when you’re picking the supplier. You’re architecting your supply chain of the future. So I think one of the things that yet you’re going to have to have is to be able. The the ability to manage all of the suppliers in that supply chain align all those suppliers that supply chain. And you know we’re going to have competing supply chains over time. So I think you know, it’s always going to have to have that
00:38:15.520 –> 00:38:39.380
Bill Michels: supplier relationship to apply a collaboration part of our business that makes our our business good. And then the second thing is as I go around, and I talk to Ceos and and other things as I did in my consulting business, one of the biggest gaps that they pull out and skills is the business skills the ability to turn things into financial analysis, the the
00:38:39.380 –> 00:38:52.389
Bill Michels: the ability to take and say, I want this digitization and make a business case using financials using, you know, strategies using an and and we have that gap. So people need to hone up on their business skills.
00:38:52.740 –> 00:39:20.220
Clive R Heal: That’s a really good point. I mean, Bill. We we we did work with Lebanon AI to look all of the synonyms and some of the jargon that we use, and and we have like 200 words that the procurement people use like what the heck is that to somebody in the business. So the ability to talk the business language, and, you know, almost hide what we do. But you know this is the the swan, right on the on the surface. It looks great on. They don’t need to know what’s going on underneath the water.
00:39:20.220 –> 00:39:28.519
Clive R Heal: you know, in terms of what we do in the current. They shouldn’t have to. So it’s like, how do we? How do we? How do we manage that one? Another point I wanted to make is
00:39:28.530 –> 00:39:33.329
Clive R Heal: is that we. everything that we do in procurement has
00:39:33.350 –> 00:39:47.859
Clive R Heal: has an impact in terms of with the business and with the supply market. And I think of like commercial entanglement, meaning that, you know, there’s a there’s an opposite reaction, or there’s a there’s an impact somewhere in the whole
00:39:47.930 –> 00:39:50.149
Clive R Heal: universe of where we operate
00:39:50.230 –> 00:40:07.520
Clive R Heal: as a result of what we do. So we need to be mindful of how, what we do as an impact on on our customers, our business partners, and on our suppliers through the commercial entanglement of the actions that that we take. So so I people might be, I think, surprised that
00:40:07.680 –> 00:40:29.280
Clive R Heal: or shocked even what procurement could potentially achieve if it was to be more courageous, use technology more and really, really be inspired to try and drive, drive, change. The great thing about digital technology and procurement? Is it typically forces you to change the business model? And we know that changing the business model
00:40:29.280 –> 00:40:50.250
Clive R Heal: has the potential to deliver a significant, significantly more value. So it’ be a willing to look at changing the model. It’s not about keep keep your process and try and force this technology. And it’s about is, look at the technology. And how do we change the way we operate? To be more efficient, to create more value, to, to to be more aligned to what the business want.
00:40:50.960 –> 00:41:13.120
Pierre Mitchell: I I want to remind our audience we have about 5 more minutes left to the webinar, so if you have any questions, please stick them in the Q. A. And we’ll get to them. Okay, Pierre. Oh, no, that’s right. I’m so I wanted to just backtrack a little bit quickly on something I said before, which is around the empathy and the human centric piece of it. I think one of the some just trying to give people some practical things that they can do coming out of this. So one is
00:41:13.120 –> 00:41:39.189
Pierre Mitchell: get smart on agile development, you know, around digital, if you’re one of your competencies, because you don’t have to learn all of the jargon because it’s its own universe of jargon. But but do understand the the concepts around agile and the concepts around design, thinking and design set and thinking, which starts ultimately with empathy. And what is it that your stakeholder is trying to do because they’re in a box. They don’t have that much budget they’re trying to support, whether it’s a functional partner or a business unit.
00:41:39.250 –> 00:42:08.809
Pierre Mitchell: They’ve got challenges, right? So really understanding where they’re at, how they’re measured and what they’re in gold with doing. And obviously, if you can align with them early, and planning and budgeting, and all the things that they’re doing when they’re going to make that decision of. How do I help myself. That’s where the moment of truth is to be like. Aha! I know where you’re spending way. Too much money. I know where there’s a lot of risk in the supply chain. But I also know there’s a ton of opportunity to help solve that problem. It might not be the right problem. But let’s not, you know, a solution.
00:42:08.810 –> 00:42:37.480
Pierre Mitchell: But those are some of the capabilities that you should be looking at the inflection point or procurement transformation is when the stakeholders, like crap procurements actually here to really help me. They’re not just here to be like I’m from corporate. I’m here to help, but I’m ultimately here to kind of drive savings to make my numbers and whatever that means, and you’re going to get your budget reduced on the tail end of you know. Why don’t they call me back anymore? Right? So that moment of truth, of being able to actually help folks. And you can’t do that unless you transform yourself and know how to talk about.
00:42:37.640 –> 00:42:48.649
Pierre Mitchell: Not just you know the digital side, but agile development to do quick transformation, to be able to talk about 0 based budgeting on in business cases, right to talk about
00:42:48.650 –> 00:43:08.229
Pierre Mitchell: design thinking. So it’s using digital in the context of not just your services that you offered a business, but also these, all their kind of competencies, and they that that kind of connect together. So what about agile learn on design thinking? you know, and some, and and I think that’ll also help engage and help you work better with it.
00:43:08.230 –> 00:43:37.650
Pierre Mitchell: That’s all trained up on Agile and all these things right. And it’s gonna also help you go to go to market internally right with it and and help folks, you know have a better toolkit versus. Here’s my end step sourcing process that I’m going to drive and turn you through. It’s like, Okay, great. That’s not very exciting. That’s what you do. You know how you helping me? Right? So I got one last question from the audience, which is, do you have any thoughts on marketing? The procurement element in the in the company strategy. How do you get
00:43:37.650 –> 00:43:39.890
Bill Michels: procurement into the strategy of the company?
00:43:40.540 –> 00:43:55.589
Pierre Mitchell: Yeah, that’s that’s that’s a great one. There are some functions that I procurement more on the high end that actually have leverage their own marketing departments and their brand management functions to help them in the transformation. And there’s lots of ways to do it.
00:43:55.590 –> 00:44:10.609
Pierre Mitchell: you know. Vsp had a great thing that they did with, you know, like a big mascot, you know. Mullah, you know the you know the the the money. It is spewing monster. There’s lots of ways at which you can kind of just take good cell side things and bring them
00:44:10.610 –> 00:44:32.220
Pierre Mitchell: in internally, that you can, you know, make make that you can leverage. But I think also, the biggest thing is, just think about yourself as a services business and as a professional services business and as a services business, you have to market your services. People need to understand what your services are. You need to have you need to show where your services have helped other folks in the business
00:44:32.220 –> 00:44:54.760
Pierre Mitchell: drive a ton of value right? You are an internal services business, because guess what? There’s a lot of external services, businesses, Bpos and whatever like. Oh, yeah, talking to, you know your to your boss to the Cfo and to the CEO, saying, Oh, yeah, I can do that stuff and get you 10 x the value than your current Cpo is you. You don’t want to be in that situation right? So you know, I I would say, that’s one tactic that you can do.
00:44:55.090 –> 00:45:19.419
Bill Michels: That’s great. I was gonna ask you your final thoughts. But I think we could go on for another hour if we if if we just we just started So I think we’re we’re at the end of the program, and I want to thank thank you, Pierre, for your your help, and I want to thank you, Clive, and I want to say we had one comment in the questions that said, this is a thoughtful and insight and insightful conversation. So people seem to really like it. So thank you both.
00:45:19.480 –> 00:45:28.800
Pierre Mitchell: And with that there’s a sign off.