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Get ready to dive into the exciting world of procurement and explore the Predictions for the Procurement Future! In this webinar, we will explore the upcoming trends, advancements, and challenges that will shape the Procurement landscape in the years to come.
As technology continues to evolve at a rapid pace, automation, artificial intelligence, and data analytics are transforming the procurement function. We will discuss how these advancements will impact Procurement processes, supply chain management, supplier relationships, and overall business strategies.
Clive R Heal and Bill Michels will be Joined by James Meads, from Procurement Software. Our panel of industry experts will share their valuable insights and predictions, providing you with a glimpse into the future of Procurement whilst they discuss the innovative tools and technologies that will revolutionize Procurement practices.
Join us for an engaging and thought-provoking discussion, as we bring together leading voices in Procurement to provide you with invaluable insights and predictions for the Procurement future. Don’t miss out on this opportunity to learn, innovate, and position yourself for success in the evolving world of Procurement!
Read the transcript here
00:00:02.400 –> 00:00:19.240
Clive R Heal: Hey? Good morning! Good afternoon, Good evening, everyone, and welcome to our second Webinar in the series. Predictions for the procurement future. Got a couple of great guests today, my my co-host Bill Michaels, recently described in another Webinar as the godfather of procurement.
00:00:19.280 –> 00:00:39.020
Clive R Heal: Given all his experience over the years and Of course, the well known James means, I hope James actually is sponsored by linkedin a dollar per per post, because if he is, he’s probably a millionaire by now, because he is so prolific, and he’s doing great things at this. So let me just hand over quickly the bill and the James to introduce themselves. Bill.
00:00:39.220 –> 00:00:50.500
Bill Michels: Sure, my name is Phil, Michael and I’ve been around for quite a while. I started in in different positions, senior positions and corporate purchasing, and then ran a consulting company for a number of years.
00:00:50.500 –> 00:01:00.380
Bill Michels: and then I’m. Work with ism and and sips, and now i’m working with Clive and Lavender, building up the future in negotiation training.
00:01:00.680 –> 00:01:02.590
Clive R Heal: James: James.
00:01:02.970 –> 00:01:10.960
James Meads: Yeah, thanks, Clive. Thank you for the invite. Lovely to Lovely to be on here with you. So yeah, my name is James Mead. I’m. Originally from the Uk.
00:01:10.960 –> 00:01:40.310
James Meads: Now living my summers mainly in Bulgaria, and was just speaking to Clive and Bill earlier on, hoping to spend my winters in Latin America. This, as we go forward to escape the call, I started out in procurement in the automotive industry, and then moved into the consumer good space. So I spent 16 years in a variety of direct and indirect procurement and category management roles, and a bit of internal consulting, as well across 2 different continents.
00:01:40.310 –> 00:02:04.690
James Meads: And then, since beginning of 2019, I’ve run my own business, which led me to to start my podcast, the procure tech podcast, which then ended up being procurement software dot site, which is the business that I now run, which is a a directory website of an online media company of over 320 procurement tech solutions that you can filter and search on
00:02:04.690 –> 00:02:10.160
James Meads: in that database of which Lav and I 11 year AI is, is one of them.
00:02:10.160 –> 00:02:28.850
Clive R Heal: So yeah, Glad to be talking all about digital procurement today. Thanks, Bill, thanks to James. So let’s just spend a couple of minutes talking about the current state of procurement, and then let’s get into some of the emerging technologies and our predictions for how we see it going. So, bill. How do you see the current state of procurement in like 2 min, Max.
00:02:29.540 –> 00:02:56.780
Bill Michels: the current, the current state of procurement is really in a significant change. After several of the things that have happened that disrupted our world like earthquake and Japan, floods in Thailand, Donald Trump and his trade wars the warrant, the the war, and Ukraine and pandemic people are trying to scramble around to find out where we’re. Where is the best place to be sourcing these things, so should we be sourcing in with with low-cost country
00:02:56.780 –> 00:03:13.780
Bill Michels: costs, and then trying to ship everywhere from the world. And I think we found out that doesn’t work. So now it’s. How do we? How do we reassure? How do we ensure? How do we automate? What what are the kinds of things that we’re doing? And everybody should be looking at their supply chains to increase flexibility and reliability over to you. James.
00:03:15.040 –> 00:03:18.070
James Meads: Yeah, I would certainly concur with that. I mean, I think
00:03:18.070 –> 00:03:47.420
James Meads: Ne assuring or or or friend sharing to to friendly a countries is is gonna become more of a thing. And reading a lot of articles at the moment saying is Mexico, the New China, specifically with a more North American context, obviously. But then, if you spend that across to Europe, you could say the same thing for Turkey as well, you know, with the low cost, very mature, manufacturing, base, and young workforce. So I do definitely think that is a trend. The other change in procurement, I see, is that I
00:03:47.420 –> 00:03:52.020
James Meads: I think that traditional category management is going to become
00:03:52.170 –> 00:04:11.500
James Meads: less important. I mean there was still there will still be category manager positions within procurement. But I see procurement as as transforming more into into a data-driven organization. At least you know the more mature ones, and the the early adopters are already starting to do that. You know, when you look at
00:04:12.070 –> 00:04:28.350
James Meads: companies like Facebook and tender, and a. B+B. That their data companies at their house, and that’s how they’ve got the valuations that the that that they’ve managed to receive, and that, and I think if we apply that to procurement, there’s a lot that we can do through having more fact based discussions with our stakeholders.
00:04:28.970 –> 00:04:42.390
Clive R Heal: James. Let’s talk more about that in terms of category management, because that really has been the the heart of a category management. Srm. Has really been the heart of over the last 30 30 plus years. So
00:04:42.560 –> 00:04:48.070
Clive R Heal: tell me more about why you think that category management then evolves or changes or goes or dies?
00:04:48.720 –> 00:05:11.360
James Meads: Yeah, I mean it was a it. It. It was a concept that I was already sort of had in my mind, but it’s the cemented it when I read a book written by for Bcg. Guys for profit from the source which you know the Tldr is. It’s essentially a book that says, You know you need to work more closely with your suppliers and leverage the strategic benefits that that so partnerships bring you with.
00:05:11.360 –> 00:05:21.430
James Meads: we we with with really elevating your strategic supply base, and they gave the example of the automotive industry, and Bosch A and bosh pretty much supply
00:05:21.510 –> 00:05:43.110
James Meads: anything everywhere on a car, and if you and if you have the traditional Cap man approach. Then you’re gonna be leaving a lot of cash on the table through not strategically managing Bosch across the chassis, the power train, the the the the interior trim, and all of the different things that the boss supply into into an automobile.
00:05:43.110 –> 00:06:01.240
James Meads: And I think you can apply that across across the whole whole different range of categories and industries as well. So don’t get me wrong. I still think it has its place, and I think, having having a category strategy for a particular area of spend, I do think, is still a smart move, and there’s a lot of
00:06:01.240 –> 00:06:19.760
James Meads: category strategy software coming onto the market. Now it was. It was Search you over a number of years, pretty much the only game in town, but there are new players coming into the market now, and and I think that will continue to grow as a as an area of procurement tech. But I just think the way that procurement is structured.
00:06:19.900 –> 00:06:36.320
James Meads: We need to think beyond that side of it’s not my problem, mate, because it’s not part of my category. You know this sort of shifting the the shifting the hot potatoes sort of attitude, I think that has to go because it’s it’s outdated now in in, you know, joined up supply chains and
00:06:36.320 –> 00:06:44.730
James Meads: suppliers becoming almost bigger than the companies that they supply. In many cases, especially especially in industries like like automotive.
00:06:45.530 –> 00:07:05.500
Clive R Heal: James is interesting. You say that because I think I have a slightly different view, but it sort of builds on what you’re talking about there. I think that I could see is still continuing to have category management and category stretches. But I think to be able to relate to the individuals in the business through an increased human empathy, and really understanding the business partner. What they want.
00:07:05.500 –> 00:07:10.230
I can see us creating more human-centric strategies in terms of
00:07:10.300 –> 00:07:13.120
Clive R Heal: what am I? What is procurement doing for you.
00:07:13.120 –> 00:07:34.600
Clive R Heal: mark head of marketing. What is procurement doing for you? Head of manufacturing? So it won’t be Here’s 10 category strategies that we’re all going to support you. It’s Here is the strategy. For what procurement are going to do to support you in marketing or to support your manufacturing underneath. Of that we’ve actually built our own category stretches for the different areas, but they they roll up into a
00:07:34.650 –> 00:07:49.570
Clive R Heal: almost consolidated personalized strategy. So so in procurement we hold the category stretches or the stretches of what we’re going to do for each of the spend areas. But that is not what ultimately is presented and goes in front of.
00:07:49.570 –> 00:08:05.860
Clive R Heal: You know, the head of marketing with head of manufacturing, and so on. So it’s something that relates to them their business. This is how we’re going to meet your needs. This is how we’re going to deliver value to your business. Underneath of that there’s a whole stream of different activities that we’re then doing with suppliers for different categories. Bill.
00:08:05.960 –> 00:08:31.360
Bill Michels: you think, do you guys think that there’s a need for broader strategy strategies and strategy management, because what I’ve seen is people after the pandemic have really kind of resorted to. Let’s get supply less. I worry about anything, and I don’t really see them looking out. What am I going to do in the next 1, 2, or 3 years, and I don’t see them integrating with the other business functions. I mean, I think, that there’s a loss of strategic direction. Is that what you guys are seeing?
00:08:32.860 –> 00:08:48.130
James Meads: I I I think it’s more about how to, and I. I agree with what Clive said, that I think you still do will need category experts on specific areas of spend to really be able to challenge the suppliers when when they’re trying to turn the screw on on, on on price. But
00:08:49.090 –> 00:08:52.130
James Meads: I I think it’s. Part of the problem is how we communicate
00:08:52.210 –> 00:09:22.210
James Meads: and and how we face off to the business. I mean. I’ll give you an example. This is going back a few years. But I was. I was the category manager for Capex and Mro across our German speaking production sites in the consumer goods industry, and typically because I was the guy that was on site more often than my peers, because I was based in Germany. I spoke German, and Mro and Capex is quite a messy category, and you have a lot of stakeholders. I used to constantly get people coming up to me, saying, hey, we’ve got a problem with the photo.
00:09:22.210 –> 00:09:39.120
James Meads: Copy your supplier, or you know we we we get. We we’ve had the bailiffs come because we’ve not paid our energy Bill, the the stakeholder in the in the production site doesn’t care that he he needs to speak to Letitia for it, or to deal with Robert for energy.
00:09:39.160 –> 00:09:54.610
James Meads: They they want one person that they can go to, preferably someone that speaks their language and understands their business culture. So while I I do completely agree with where I live coming from, I think how we face often from an intern internal comms perspective.
00:09:54.610 –> 00:10:12.410
James Meads: deal with the business and finance of the same issue, right, you know, in terms of having a business partner, and then Hr. To some extent as well. I think that’s the bit that we don’t really have right at the moment, and we need to to do a bit of soul searching about how we manage that because if we’re ever going to be seen as
00:10:12.410 –> 00:10:20.720
James Meads: being a valued business partner rather than a function, just the things in silos and categories that’s always going to be our kids, he a little bit.
00:10:21.400 –> 00:10:39.280
Clive R Heal: I think there’s an opportunity as well, James, for we come up. People need to really get involved in and understand other parts of the business. If you went into procurement, you started to come, and you know, in our day you probably started in a different function and found yourself in procurement. Right now. People actually
00:10:39.280 –> 00:10:44.140
Clive R Heal: do procurement at college, and they come out of college, and they do for count right, which is fantastic.
00:10:44.240 –> 00:10:52.570
Clive R Heal: However, do they really understand what’s going on in those other areas of the business? Because if you’ve never worked there, it’s difficult to understand the
00:10:52.700 –> 00:11:05.730
Clive R Heal: the the the the drivers, the mentality, the focus, the goals of all these different functional errors. If you don’t, actually somehow have that experience. So so it’s back to the how do you connect with the the business partners, and really
00:11:05.740 –> 00:11:19.650
Clive R Heal: really understand what they need, what what they’re looking for? And I give you an example, right. We in procurement think that we’re sort of, you know, the center of the wheel, and we’re linked into all other parts of the business. But you know I’ve been to it
00:11:19.650 –> 00:11:35.130
Clive R Heal: team meetings, and they think they’re the center of the world as well, because they connected everybody has it. I’ve been to quality meetings in manufacturing where quality people say, you know, we’re the hub of the the of the business, and everything comes through through quality. So so, for to my mind is about, how can we help
00:11:35.130 –> 00:11:53.060
Clive R Heal: for come up? People really understand what is important and the other parts of the basis. Why is it that really drives them. What’s the value that they want? Right, we might think, is cost savings. We might be measured by cost savings. But is that what the head of manufacturing wants. Is that what the head of marketing wants to do? She Does she want that? Or does she want?
00:11:53.060 –> 00:11:56.790
You know better better campaigns more return on the marketing investment. Whatever
00:11:56.950 –> 00:12:15.620
Bill Michels: One of the things I’ve been seeing when I go into organizations is that the 1 one of the complaints Ceos have is that there’s not enough back business acumen. And I’ve seen kind of people kind of settled back into their functional role and not really expand into the business roles, and I think that that’s that’s a deficiency that we have.
00:12:17.090 –> 00:12:24.510
Clive R Heal: Yeah, I I’ve said it before. I actually think that procurement is like a big jigsaw, you know a 1,000 pieces, but every piece has got a little picture on, and everybody
00:12:24.530 –> 00:12:43.100
Clive R Heal: understand, so that’s that’s a flower that’s a tree, or whatever. But what they don’t always see is what’s the whole picture when you put all the pieces together, it’s one thing understanding this piece and that piece, but like, how does this all fit together? And for me that comes through, you know, different experiences and different different different opportunities.
00:12:43.130 –> 00:12:49.550
Bill Michels: We have an early question. This is what strategy should organizations adopt to manage and optimize categories?
00:12:51.200 –> 00:12:56.150
Clive R Heal: Well, that’s a good question of James, because he we do have different theories. Go ahead.
00:12:56.600 –> 00:13:10.390
James Meads: I think procurement need to think more like market as an entrepreneurs rather than technocrats, and I think if they do that, then they’ll understand what the challenges are of the wider business, and then in turn they’ll be able to then
00:13:10.390 –> 00:13:28.700
James Meads: lobby that case back to the to the Cfo or the Chief Supply Chain Office, or whoever it is that they report to that. You know that the rest of the business doesn’t care about category management or cost savings, and and and then try to try to funnel it up from the bottom, based on that feedback. But if procurement, then just
00:13:28.700 –> 00:13:36.550
James Meads: brush it off, and a and a and and just go ahead with with the approach that they’ve always done, which is
00:13:36.650 –> 00:13:46.920
James Meads: managing in very rigid categories and just just reporting cost savings. And you know, I think the average procurement professional genuinely wants to be seen as a value driver.
00:13:46.960 –> 00:13:49.170
James Meads: You know I I would. I was quite.
00:13:49.270 –> 00:14:07.860
James Meads: I always used to quite like it when stakeholders will come up to me and say, You know, how can we work with suppliers to reduce our energy costs, or to, or to increase our up time, or or or or or reduce, I spend on spare parts. I used to quite enjoy it, but it it frustrating me that I didn’t get recognized for it a lot of the time.
00:14:09.340 –> 00:14:25.230
Clive R Heal: I think my answer would be, Bill, when you, When the plumber arise, I don’t care what’s in the toolbox, right? I really don’t care right. I don’t mind if it’s a hammer or a monkey wrench to span or anything right. What I want is the leak fixed, or whatever on you know it’s. It’s more about
00:14:25.330 –> 00:14:35.750
Clive R Heal: this. So it back to Jane’s point early. It’s all about the the tools that we use are up to us. But what is it? Ultimately the business want from us? And how do we? How do we align line to that view.
00:14:36.360 –> 00:14:53.080
Clive R Heal: What? Why, don’t we? What do we, James? I’d love to talk to you about emerging technologies? What you see. I mean, you mentioned earlier procurement, software? That site which I think is a great resource for people I mean for me it’s a go to in terms of who’s out there? Who are the players in the marketplace love that.
00:14:53.080 –> 00:15:12.520
Clive R Heal: What are you seeing in terms of some of the big technology changes? Because we, the technology asteroid, has really hit us right. You know the dinosaurs for government dinosaurs gonna go. It’s land that it’s here. It’s reality is has changed it. Maybe it’s an artificial reality. But the reality is change. What are you seeing as the the big things now in technology?
00:15:13.000 –> 00:15:22.070
James Meads: That’s that’s the sexy description. Isn’t it. And I think we’d all like to think that it’s like that, and and Don’t get me wrong. There is a lot of really exciting emerging tech coming out. But
00:15:22.500 –> 00:15:34.400
James Meads: do you know what the biggest change is, I think, that we’ll see over the next 5 to 10 years. I I think it’s a lot of small medium. Sized businesses are going to be using relatively simple.
00:15:34.490 –> 00:15:42.390
James Meads: low code, no code applications and robotic process automation that just has a nice front end and user experience
00:15:42.390 –> 00:16:02.730
James Meads: to to automate and simplify and eliminate a lot of drudgery process work that the currently is being that currently is being done by administrative transactional procurement professionals. And you know you. You’ve had the economic case to do that in places like Europe and North America for a number of years, just because
00:16:02.730 –> 00:16:18.220
James Meads: salaries are high, it’s difficult to find talents a lot of the time, and in the case of Europe it’s it’s difficult to fire people if you want to. If you if you want to downsize your your department. I think what we’re gonna see now is that as these tools become more and more affordable.
00:16:18.220 –> 00:16:29.290
James Meads: it’s going to become a no brainer in places like in places like India and Brazil. And you know all of these populace emerging markets that even though they have a demographic dividend.
00:16:29.720 –> 00:16:32.660
James Meads: I think there’s gonna be a big trend of
00:16:32.930 –> 00:16:40.790
James Meads: low, skilled white collar Jobs are going to become redundant, and and and technology is going to
00:16:40.940 –> 00:16:55.870
James Meads: also automate a lot of that away. So I think that’s one exciting, but also potentially dangerous. If we, if we, if we think of you, know the geopolitical impact and and potential social and rest that could that that could trigger.
00:16:55.870 –> 00:17:13.230
James Meads: So I mean that that’s maybe quite a boring answer. So let me go over to to some of the more sexy stuff that I see. So there’s certainly what you guys are doing in terms of bringing. And you didn’t you didn’t pro poke me to say that just for the record, I think in terms of what you guys are doing to make training more interactive
00:17:13.230 –> 00:17:18.730
James Meads: and to bring training online and out of the classroom. I think that will really be a game change
00:17:19.089 –> 00:17:32.540
James Meads: If you didn’t sit in head office and you weren’t, then you weren’t identified as being a development candidate, often in in large corporate organizations, then learning and development kind of passed you by to a large extent. And I think, if
00:17:32.540 –> 00:17:45.050
James Meads: if training is affordable and deliverable online and doesn’t require a week in a hotel and flights, and all of the other things that eat into into into organizations budgets. I think that will be a game changer.
00:17:45.230 –> 00:18:04.190
James Meads: I mean, there’s not just a avenue. There are other. There are other tools now in terms of maturity, assessment, and procurement, personalities and understanding, understanding things like mindset and personality, and all of that that would have previously made it be in a classroom training session that can be brought online. So that’s that’s number one.
00:18:04.520 –> 00:18:05.430
James Meads: I think.
00:18:05.510 –> 00:18:22.720
James Meads: and I know it’s a buzz word. But if I if I use an AI example. I think the biggest benefit that AI will bring us is that it can do a lot of the a lot of the grunt Work a lot of the spade work which which typically would have been something that
00:18:22.720 –> 00:18:29.230
James Meads: a data analyst or even a consultancy, would have been brought in and would have taken them weeks or months. In some cases.
00:18:29.720 –> 00:18:37.060
James Meads: as AI improves, you’re gonna get an and there even our tools coming out on the market that claim to be able to be at
00:18:37.060 –> 00:18:59.070
James Meads: 90 95% accuracy when they when they analyze and categorize and put your spend into into a taxonomy that, historically you know, speaking to people that understand data classification, like my good friend Susan Wall, shoot, I’m sure anyone that’s been on Linkedin knows her to. She always used to say the spend analytics tools would only get you to sort of 50, 60%, Max.
00:18:59.070 –> 00:19:07.310
James Meads: They’re now coming on the market, and I think they’re going to get better as time goes on. That will be sort of 90, plus. I think that’s that’s another one.
00:19:07.680 –> 00:19:21.020
James Meads: You’re always going to need a human that’s going to be able to interpret those results and tell a story and sell the benefits of the business. So I think that’s in terms of procurement skill set. That’s where we’re going to see the change in that.
00:19:21.640 –> 00:19:34.700
James Meads: The procurement professionals that have been raised almost to be like public sector bureaucrats, and just follow a process. I think that skill set is going to become redundant very quickly, because
00:19:34.700 –> 00:19:51.290
James Meads: technology is gonna do a lot of the a lot of the process driven work for you even in terms of sourcing. Now you’re seeing autonomous sourcing applications, you know fair market is able to do a lot in terms of supplier scouting, and then request to tender
00:19:51.710 –> 00:20:02.580
James Meads: packed them is able to do simple peppers, supplier negotiations on non complex spend, and on things like simple nda’s and legal agreements
00:20:02.580 –> 00:20:15.750
James Meads: you’ve got a lot of. I mean it’s not there yet. But you’ve got a lot of legal tech that’s able to read through contracts and and and recognize clauses that may be troublesome, that an and automatically red line them.
00:20:15.980 –> 00:20:23.170
James Meads: So I think a lot of the a lot of the work that I, as a procurement professional really hated doing.
00:20:23.410 –> 00:20:38.360
James Meads: I I think you know, really forward thinking organization. Now, that work would be taken away from me and done by AI, that’s going to create the need for different types of roles and different types of management. Obviously, so.
00:20:38.360 –> 00:20:43.960
James Meads: you know, procurement leaders, heads of procurement directors. Anyone that has a people management role
00:20:44.020 –> 00:20:54.880
James Meads: are gonna need to be able to manage probably data on the lists and program as well as as well as the more traditional cap man in and center of excellence process types of roles as well.
00:20:55.070 –> 00:21:00.400
Bill Michels: So, James, that leads us into the second question from the audience, which is, is AI going to take over?
00:21:00.810 –> 00:21:01.820
James Meads: No.
00:21:02.110 –> 00:21:13.170
James Meads: So here here, here’s what i’ll always say on this if you’re in a relatively administrative, low, skilled, white collar.
00:21:13.180 –> 00:21:23.130
James Meads: administrative or operational procurement role you need to either up skill or retrain because your job is going to be, is is not going to exist in 5 years time.
00:21:23.540 –> 00:21:36.190
James Meads: If you’re doing, if you’re managing a complex category like it, or professional services, or or some or or direct materials that that that that are really critical to the production operation.
00:21:36.810 –> 00:21:52.130
James Meads: Your friend is gonna be all of the sort of machine learning and AI tools, because that they’re gonna give you the opportunity to spend more time with your stakeholders and your suppliers, doing what you should be doing and what you’re paid to do, because
00:21:52.680 –> 00:21:58.530
James Meads: no procurement professional is brought into a business to spend 50% of their time on administrative tasks.
00:21:58.840 –> 00:22:17.670
James Meads: There’s there’s a famous quote by an American marketing. Guru called Perry Marshall, and he says the average, and this is going back to 15 years when he wrote the book. So the salaries a little bit out of date. But he said the average $100,000 a year. Executive spends half of his time on $10 an hour. Administrative tasks.
00:22:17.670 –> 00:22:23.680
James Meads: an even highly paid senior executive spend a lot of time on non value added work.
00:22:23.710 –> 00:22:35.860
James Meads: And it’s true, you know, if you, if you look at the average procurement organization during the 2,008, 2,009 financial crisis. We fired all of our our administrative administrative assistance.
00:22:36.460 –> 00:22:53.210
James Meads: Funny that sales didn’t fire there isn’t it. Wonder why? Because they add value. Because if you’ve got a category manager, that’s on a 6 biggest Saturday that’s doing that, it’s waste, You know. If that if that was a manufacturing process, you would have lean consultants crawling all over it. And I think that’s the big difference.
00:22:54.340 –> 00:23:24.340
Bill Michels: Yeah, I mean, I wanted people to ask you that question, and and a long time ago I I wrote a book, and and what I said is that over time supply chains are going to be integrated, and and when people pick a supplier they’re really architecting their supply chain for the future. So I mean, even though they tactical and transactional tasks are going to be gone. There’s going to be a need to align and integrate that supply chain. Get everybody on the same business goal, and we’re trying to see that happen. Now, if you look at automotive
00:23:24.340 –> 00:23:30.790
out the Japanese supply chain, you’ve got the Korean supply chain. You’ve got the the Us. Domestic supply chain and
00:23:30.790 –> 00:23:52.480
Bill Michels: and and the Japanese supply chain, and they’re all kind of breaking apart and doing their own thing. So I think you know someone’s got to build that strategy. Someone’s got to have the people skills to manage the suppliers across the chain so that everybody gets value and we get optimal value on the end product. So that’s that’s been one of my views, I tell them. No. The strategic portion of procurement is always going to be there right.
00:23:52.480 –> 00:24:12.270
Clive R Heal: I think the answer to the question is, it depends on your time scale. Okay. So maybe this is controversial. But right now I think we’re at a point where AI is working for us. I think we’ll get to a point where AI works with us as a equal partner, and I could see in the future where. AI, we report to
00:24:12.390 –> 00:24:22.790
Clive R Heal: an avatar driven by a I. And let me let me tell you a bit about my thinking there, so you could write. Not yet. Maybe you could write technology
00:24:23.400 –> 00:24:41.340
Clive R Heal: algorithms that actually look at market opportunities, and i’ll give you an example. It looks at the data for a particular geographic area it looks at. How many people live there it looks at, how many Italian restaurants are actually in that area. None is there a potential demand for Italian restaurant. Yes, it sets up. A company
00:24:41.340 –> 00:24:51.290
Clive R Heal: actually starts to employ the people. It keeps growing the business until it either sells it or it’s making it. It’s not making enough money, and it just shuts the business down overnight, and I really think that
00:24:51.290 –> 00:25:09.290
Clive R Heal: i’ll. We might be 30 years out or something. We’ll get to a point where AI is creating operating running businesses by by itself. Right? Yes, there are people that work for there, and I think the question really was about procurement people. We we do. I mean, we’ve seen it, Bill, that you know you can create a complex
00:25:09.400 –> 00:25:28.940
Clive R Heal: business situation where there’s 10 moving parts. Okay. And so right now, we think, okay, human needs to look at that to say, okay, is it more? Is it more important? I sort of the quality problem. Is it more important? I I sort at the sustainability issues. Is it more important? I keep my CEO happy? Is it more important. I deliver the cost savings that the Cfos
00:25:29.110 –> 00:25:38.260
Clive R Heal: beating me over for. So right now, there’s there’s judgment available, right? The opportunity for procurement people to make to make decisions. One of the
00:25:38.770 –> 00:25:57.460
Clive R Heal: concerns I have is that what we’re seeing now? With all the with, all the generative technology, the AI stuff. What we’re seeing now is that everybody is getting access to the same sort of level of information. Okay, anybody can put the same question in and get this. Get the same set of data out right. And so it’s going to be about.
00:25:57.460 –> 00:26:10.200
Clive R Heal: You know, who gets first to insights. but it’s going to be about your own individual creativity beyond what chat, Gpt, or whatever the technology is, has given you. Okay, because everybody, if everybody gets the same, 5 answers right.
00:26:10.200 –> 00:26:23.420
Clive R Heal: You know, I recommend you do 1 2 3 4 5, right? They’re all going to go off and do the same thing. So they will. It basically levels the platform levels of playing field to the same level. And so the only way per current people can really stand apart from that
00:26:23.450 –> 00:26:39.040
Bill Michels: is to be more creative and and come up with diverse pathways that the technology Hasn’t come up with. That’s great that you leading right into the next question, which is speaking bluntly. Do you think some procurement companies are able to adapt fast enough to these changes?
00:26:40.050 –> 00:26:46.420
Clive R Heal: Let me just jump in quickly. That’s that, James, because I know you. You can answer that as well. I I I
00:26:46.530 –> 00:27:04.530
Clive R Heal: I recently did a search on Linkedin in terms of how many people are in procurement, transformational or procurement excellence roles in the in the Us. And Europe, and and there’s nearly a 1,000. So what’s what we’re seeing is companies are going out now. They’re they’re pointing people to really drive the
00:27:04.530 –> 00:27:20.620
Clive R Heal: drive, the whole digital procurement world that really for me is part of our future. Like it’s, it’s all about it connecting with the people and leveraging the technology. And how do we as procurement people bring those? Bring those 2 together? But you know, we know that companies
00:27:20.620 –> 00:27:30.690
Clive R Heal: maybe more medium. A larger companies companies now are pointing people into these roles. They realize the importance of it, and they’re really driving forward for for the whole digital roadmap.
00:27:32.930 –> 00:27:44.410
James Meads: Yeah. And I, I I think, to answer, go back to the question. I think. just trying to let me just speaking bluntly. Do you think some procurement companies are able to adapt fast enough to these changes.
00:27:44.470 –> 00:27:51.560
James Meads: I I don’t think they’re able to that fast enough in many cases, and i’ll i’ll. I’ll qualify my answer here. So
00:27:51.710 –> 00:28:11.930
James Meads: Yes, you are seeing a lot more center of excellence Roles and you and you are seeing a lot more functions coming in to to do digital transformation. I think the risk that you the risk that you have there. And i’m speaking now more into the large corporates. Is that the agenda or the choice of software solution or digital transformation roadmap.
00:28:11.980 –> 00:28:30.210
James Meads: has already been determined by by this by the CIO. Well, maybe even the CEO. And if they’re gonna, if they’re gonna lump you with some clunky software because they have a they have a strategy to source all of their software, from a certain large erp provider, for example. Then
00:28:32.470 –> 00:28:47.080
James Meads: you’re not gonna get very far, because the user experience is horrible, and suppliers hate using it. Frontline category managers. How you using it, and and you’re not going to get very far doing that where I do think there is a huge opportunity for change is
00:28:47.080 –> 00:29:14.710
James Meads: in some of these in some of these sort of mid to large businesses that are that are big enough to need and to have a strategic procurement function. If we’re seeing a generational change there, where heads of procurement in their 50 s and 60 S. Is starting to retire, and the people that are stepping up into those roles, and perhaps in their late thirties, early 40 S. In in many cases these are going to be an assigned goes on even more. So these are going to be digitally native. The individuals I mean I’m.
00:29:14.710 –> 00:29:37.340
James Meads: I’m. 44 so i’m i’m a little bit too young to have used Facebook and Instagram during my formative years. But I went into the workplace at at 22, and I graduated university and email is ubiquitous. Everyone used it. So it’s gonna be a little bit like it’s gonna be a little bit like that. If you’ve got someone coming into a head of procurement role
00:29:37.340 –> 00:29:44.130
James Meads: that that’s grown up through that through the university years using smartphone apps.
00:29:44.340 –> 00:30:10.040
James Meads: They’re not going to want to use S. A. P. And they’re not going to want to use somebody and i’m not picking on sap. All of these big legacy. IP systems are the same. They’re not going to want to use some of these really legacy source to contract source to pay suites. There are some new ones coming out onto the market now that that do have a better ux normal versus higher than or easy to, and it easier to to implement. But that’s going to be the wind of change that we will see
00:30:10.040 –> 00:30:25.070
James Meads: in corporate organizations 14500 companies. There’s too much politics. A lot of people on the C Suite have very incestuous relationships with suppliers. I’m not going to say corrupt, but They certainly have golf course relationships in a very close
00:30:25.070 –> 00:30:36.910
James Meads: to some of the big consultancies and big software solutions, providers. And and that does unfortunately spill down into. You know what the minions that have to use that that software every day have to experience that.
00:30:37.170 –> 00:30:57.280
Bill Michels: Yeah. And I I have a comment on this. I mean, I I work with a lot of mid-size companies, probably 2 to 700 millionand a lot of them haven’t made the investment in any system. Some of them are still doing homegrown systems, and I, I recently went to one where one of the leaders of the company founders of the company built all of the
00:30:57.280 –> 00:31:21.560
Bill Michels: all of the planning systems, and and they’re you know they’re they’re obsolete. And then I I went to another one where only the people that can generate the source code to deliver. Reports are successful in the company, and so without these investments it’s been bad, and then I look at the future, the Erps. I I see the future, the Erps as really being big databases, and then, having all these bolt on cloud applications
00:31:21.890 –> 00:31:32.510
Bill Michels: to make them work effectively. So it it’s. So what the Companies Haven’t made the initial investment. They got a long road to haul to get to where you need to go to. They’re not even anywhere near
00:31:32.510 –> 00:31:50.130
Bill Michels: near digital, and and they have to really take sock and saying, You know, as they continue to grow, and they do continue to grow. They’re starting to, you know, hit the limits of what? An as 400 or one of the smaller computer systems can do. So I think there’s a big investment that has to be made, and people have to live up to the investment
00:31:50.570 –> 00:31:55.460
Clive R Heal: I was concerned about. If I was concerned about how risk averse procurement people
00:31:55.570 –> 00:32:08.810
Clive R Heal: typically or it can be. But I think i’m excited a bit more about what James is saying about as younger generation comes through who are much more technical savvy than than we may see a a quicker adoption.
00:32:09.070 –> 00:32:27.330
Bill Michels: But I think if I think if companies don’t start to adopt the technology, though they’re going to be gone. That’s the dinosaur. Yeah, it’s going to have to. It’s going to have to be not only the young people and procurement. But it’s got to be the the senior management who is recognizing the change is required to, and it’s got to be who’s going to make the investment. And where’s the cash going to come from?
00:32:28.320 –> 00:32:55.900
Clive R Heal: Why, Don’t, we just let’s James. So i’m thinking, let’s move on and talk about about some of our bigger predictions for the future in terms of how we see procurement go, because this is always the fun part of our of our sessions with people in terms of yeah. Well, where do you see procurement going
00:32:56.230 –> 00:33:02.190
Clive R Heal: predictions? So I have my pessimistic scenario in my optimistic scenario.
00:33:02.900 –> 00:33:08.740
James Meads: Let me let let me be downbeat first of all, and then finish on a high note. So if we.
00:33:08.940 –> 00:33:23.040
James Meads: if Cpos don’t adapt to the change, and don’t really understand the needs of the business, and Don’t put a business case forward and think more entrepreneurial when they’re lobbying for budget with that with the Cfo, or whoever it is that they they need to get it signed off.
00:33:23.120 –> 00:33:32.310
James Meads: The risk is, then the procurement becomes irrelevant, because if if a lot of the administrative and operational work can be can be automated.
00:33:32.310 –> 00:33:53.260
James Meads: and then you would just need maybe, some oversight from a business process outsourcing or shared services center. Then what’s the point in having strategic procurement. You you will need you, will you? You will need, maybe, a few people that know how to negotiate. But where is the wider? Where Where is the wider case for having a
00:33:53.260 –> 00:34:23.159
James Meads: but for having, you know, a strategic, supplier management, category management, supplier relationship, supplier innovation supply development. If If if a sustainability department takes on all of the the scope 3 emissions, then the pessimistic cases, the procurement could wind up, being a much smaller operation through through through through it stubborn resistance to to move with the times, and to and to speak up and be able to communicate and lobby for what they need effectively.
00:34:23.300 –> 00:34:34.380
James Meads: And if I take the optimistic case, then procurement could potentially be the fulcrum of the business. If I take the argument going back to the profit from the source. The Pcg. Book.
00:34:34.820 –> 00:34:35.620
James Meads: If
00:34:36.260 –> 00:34:49.280
James Meads: if procurement really does become the fulcrum of the business, and you know, at the center of how organizations manage their vendors in terms of both top line, growth, and bottom line savings.
00:34:49.429 –> 00:34:56.080
James Meads: and as seen as being the custodians of scope 3, because that’s the supply chain, and ultimately procurement
00:34:56.100 –> 00:35:04.980
James Meads: should be the ones that that that have the overall vendor management relationship. Then I see a re, a really rosy future. But
00:35:05.250 –> 00:35:08.920
James Meads: I would rather see a rosy, free future through us, being
00:35:09.410 –> 00:35:25.320
James Meads: innovative and entrepreneurial rather than us, just becoming that because of all of the additional regulation that Esg and compliance is gonna is is going to bring further down the road. So the the other thing I would also say to that is, I think
00:35:26.720 –> 00:35:36.870
James Meads: I i’m all i’m. I’m not their biggest fans, but I think S. A. P. And Cooper made a really smart move by implementing their marketplaces, because
00:35:36.930 –> 00:35:47.880
James Meads: organizations that perhaps don’t want to move away, or Don’t have the appetite to move away from these big, better moths that have become so ingrade, ingrained within the organization.
00:35:48.390 –> 00:35:49.710
James Meads: And now
00:35:49.950 –> 00:36:02.100
James Meads: add on best of greed tools that can that can fit into a a source to contract to a source, to pay suite, that that that is the the foundation or the platform of a of a procure tech
00:36:02.100 –> 00:36:10.350
strategy and and text that. So I I do think hats off to them. That was a really really smart move to recognize that they can’t be everything to everybody. Now.
00:36:11.490 –> 00:36:12.740
Clive R Heal: Thanks, James. Bill.
00:36:12.960 –> 00:36:27.900
Bill Michels: Yeah, I think I think one of the things that’s interesting is, we’re going to stop. We’re going to value is becoming more and more important, and we’re going to stop following low cost country sourcing. Because when you go to automation. You’re actually offsetting low, low cost
00:36:27.900 –> 00:36:56.160
Bill Michels: country sourcing. So I think the the the shift is going to happen from price to value. I think also supply relationships are going to be more and more important as we move into the future and risk management right now. If I had anything sourced in Asia i’d be looking for. Where? Where does it need to go? Because with the geopolitical factors that you’re facing, which we hadn’t had to face in a number of years is going to be critical, and the last thing I see is a trend for for most companies.
00:36:56.160 –> 00:37:26.150
Bill Michels: So most companies in the nineties went to outsourcing. And what I’m starting to see is a trend to come back to vertical integration. So you got apple making its own chips and apple and Amazon. Yeah, yeah, Amazon is a distribution company. It’s got its own trucks, trains, planes, and and any anything you might want. And the tell is actually buying buying its own trees, and Amazon bought Mgm: so we’re starting to see a a, a a lot of companies that are really
00:37:26.150 –> 00:37:34.940
Bill Michels: looking to this kind of geopolitical pressure, and and really trying to secure their their their supply chains. And it’s it’s a move back to vertical integration.
00:37:35.130 –> 00:37:53.780
James Meads: Do you think that’s built because there’s because so many of these supply relationships now have become oligopolistic that you know I I there was some graphic that I saw on the food industry in the Us. And pretty much all of the package processed. Food that you buy comes from from 10 some Mega corporations.
00:37:53.780 –> 00:38:01.290
James Meads: Is that perhaps what’s driving it that we just don’t have the leverage over the supply base any more than we used to, and they’ve almost become a monster.
00:38:01.410 –> 00:38:24.200
Bill Michels: I saw that, and I saw that Swatch actually bought all of its suppliers up so that it controls all of its processes. So that was in an article I recently read. So I think I think that’s that’s part of it. I think it was the the lack of control, and the and the lack of being able to, you know, fix their own destiny. When I started I actually started in a company that was vertically integrated. It was actually Smith, grown and typewriters, and moved into the printers.
00:38:24.200 –> 00:38:27.640
Bill Michels: and we made our own motors. We made our own printed circuit
00:38:27.640 –> 00:38:48.880
Bill Michels: Plastic came on one side, still came in the other, and out went a typewriter. So a and a printer. So we did everything ourselves internally, and very, very few purchase parts except for the raw material. So I think we’re starting to see a trend back, because the the supply chains are are out of their control for for a while, and they want to actually get control of supply chain.
00:38:49.950 –> 00:39:03.260
Clive R Heal: Well, I think we’re going to see as well that that the technology is going to get to a point where a business partner is going to have a choice. Do I want to work with procurement, or should I work with the technology and do it myself right? And it’s it’s all self self service.
00:39:03.290 –> 00:39:13.920
Clive R Heal: So we’re going to have to continue to be better than the AI in terms of the value we bring to the business, and I think a part of that is really our ability to connect, and
00:39:14.020 –> 00:39:43.710
Clive R Heal: with the individuals in in the business and with suppliers. Right? So you know that we we’re moving away, I think, from just driving competition all the time, and beat people up over the head and try and get a better deal. I think we’re moving to a much more collaborative world, where you have to embrace the opportunities for suppliers. Co-creation mutual value creation. How do you work together with your players, to create value for your own organization and also for them. And ultimately that comes down to the relationships that you can build.
00:39:43.810 –> 00:39:59.740
Clive R Heal: You know the trusted relationships you can build with those suppliers to be able to get access first to innovation, to get to get the Premier service, to get the best people working for you to get, you know, the first first access to their your new release or the new, their new products.
00:39:59.740 –> 00:40:10.600
Clive R Heal: So how can you get competitive advantage just for me is going to be much more about the relationships with the suppliers and the relationships you have internally. So I see this sort of
00:40:10.730 –> 00:40:22.620
Clive R Heal: dual approach and future of. We got all the technology. How do you leverage it? What should be in the text that what’s your roadmap for the future digital roadmap for the future and the whole people component.
00:40:22.670 –> 00:40:25.340
And what’s interesting is that might mean that
00:40:25.410 –> 00:40:26.890
Clive R Heal: the procurement really
00:40:27.180 –> 00:40:46.850
Clive R Heal: has really different competences that are going to be required in the future to be able to deliver against that type of that type of environment. And and for me the whole competency change in procurement is going to be a big thing as well. It’s it’s the people we’re going to have in 5 years time we’re going to be very different than the people that there were 5 or 10 years ago.
00:40:46.960 –> 00:41:00.210
Bill Michels: You know I had a a CEO not long ago. Ask me what? What? What? What skills! So I look for in in a procurement person, and and I had to think for a second. And I said, okay, there’s really 3 things that you you really want.
00:41:00.210 –> 00:41:16.820
Bill Michels: The first thing you want is someone that’s curious. They want to know why things are the way they are. And the second thing is, you want someone with emotional intelligence that can actually drive your, you know, relationships forward. And then and then the third thing is as someone that’s really kind of
00:41:16.920 –> 00:41:31.260
Bill Michels: influencing so they can influence the business, I said. You can teach them all the other skills you can teach them how to negotiate. You can teach them how to do things. But if they don’t have those 3 basic in in in innate skills, then they’re not going to be effective in the job.
00:41:32.230 –> 00:41:35.160
Clive R Heal: James, what are your skills for procurement people?
00:41:35.510 –> 00:41:40.140
James Meads: Yeah, I I would couldn’t go with Bill to a large extent. I would say.
00:41:40.180 –> 00:41:47.190
James Meads: Effective communication is a big one. You know anyone, I think, from a anyone that’s got
00:41:47.380 –> 00:41:58.930
James Meads: any sort of marketing background, I think, Will will in future, especially if they can learn some of the commercial aspects of of how Procurement 6 will be really effective because
00:41:59.290 –> 00:42:12.970
James Meads: one of the things that procurement for kind of professional struggle with everywhere is I did a poll going back a while on make sense, and do you find it harder to deal with that? It’s in it to deal with suppliers or with internal stakeholders, and pretty much all the responses, said
00:42:13.080 –> 00:42:19.300
James Meads: Internal Stakeholders and business partners are a trickier to manage, because you don’t have that you don’t have the leverage.
00:42:19.320 –> 00:42:31.510
James Meads: So I think anyone with some marketing skills that can that can effectively communicate. You know, if you, if you look at how terrible lawyers are at communication. That’s a good example, isn’t it.
00:42:31.650 –> 00:42:38.480
James Meads: It’s a and and procurement isn’t much best around the right in. In. In many instances. That’s one
00:42:38.480 –> 00:43:00.560
James Meads: analytical skills and maths, I think, will be more important. But that’s not necessarily in terms of category management, but I think they they will become more and more omnipresent within procurement teams. But no, it’s a very different skill set If you’re going to be a data analyst or a programmer than than anyone that’s sort of more extrovert and outward facing that has to manage commercial relationships.
00:43:02.470 –> 00:43:15.100
Clive R Heal: Thanks, James. I’m. Really big as you’ve already heard a couple of times on the human empathy side the ability to connect with the people internally and and externally as well. And I think you mentioned it, James Creativity.
00:43:15.100 –> 00:43:25.600
Clive R Heal: So the ability to to come up with something that’s not the standard. What you got at the machine, the 6 to 6 strategies you should use. But how do you do that differently? Because
00:43:25.630 –> 00:43:34.760
Clive R Heal: I think I’m. I’m too concerned about worried about the leveling of the playing field now, and the technology bringing everybody to the same level with the same answers and the same approach.
00:43:34.770 –> 00:43:36.040
Clive R Heal: And therefore
00:43:36.040 –> 00:43:59.140
Clive R Heal: how do you get ahead of the field? Right? It’s it’s one thing looking at all the horses around you and the race to see where they are right. But but if that’s the big pack, and you’re not looking at the peloton, it’s the peloton who win the race right, the people right out front, and they aren’t doing the same thing as everybody else. And that’s why, for example, I mean Cyril at Bt source. I think that’s fantastic. What he’s doing, changing the business model. If you look at
00:43:59.140 –> 00:44:01.310
where most value is created.
00:44:01.310 –> 00:44:21.310
Clive R Heal: it is always created when you change the business model. Right it it’s no point looking for inventory savings. Again and again and again, because you’ve already stripped out all the inventory. Right? Don’t. Look under the same rock, you got to create a brand new model. So this is the Uber, the air P, and these. And so when you create a new model that gives you the opportunity to deliver significantly more value and make a
00:44:21.310 –> 00:44:34.540
Clive R Heal: a change in the market. So in procurement speak, how can we rate new models change opportunities for the business in a way that other people are not thinking about in new ways, and that can be like
00:44:34.670 –> 00:44:49.790
Clive R Heal: the the first to insight, but that can be about understanding what’s happening in the marketplace. So, using the technology to really say what’s happening in the marketplace, what are the opportunities here. How can I do that? But at the same time have a really good understanding about what the business are
00:44:49.790 –> 00:44:55.530
Clive R Heal: looking for? So so I’d certainly concur with the analytical. I think Bill’s.
00:44:55.580 –> 00:45:12.060
Clive R Heal: this is a really good one as well. Because, yeah, we gotta keep being curious. Don’t just take the answer that comes out the machine in future. It’s about. Think for yourself. You know. Co-create new ideas, work with your business partners, work with your suppliers. Come up with something that nobody else is doing yet, because that
00:45:12.060 –> 00:45:21.410
Clive R Heal: is the opportunity for most value. And there’s a study by doubling that over 11 years that shows that as well. But don’t don’t do the same with everybody else. Great a whole new model.
00:45:21.480 –> 00:45:31.110
Bill Michels: So Clive let’s end this up with some audience. Questions: okay, with remote working the new norm. Do you think this will help procurement companies adapt to the fast pace changes.
00:45:31.230 –> 00:45:33.900
Bill Michels: or do you think it will cause issues.
00:45:35.910 –> 00:45:36.770
Clive R Heal: James?
00:45:37.430 –> 00:45:56.420
James Meads: You know what that’s a that’s a really interesting one, because i’m a i’m a massive, remote work advocate in the sense that I I like my location and time freedom. And I do think that you know, as long as as long as the work that gets done it doesn’t really matter. W. W. W. Where you do it, and and what time you do it.
00:45:56.420 –> 00:46:01.170
James Meads: But I do also think the procurement is an inherently
00:46:01.550 –> 00:46:13.050
James Meads: people based function, and I think that if you’re trying to manage procurement, a 100% remote, it’s going to be difficult to build those stakeholder relationships. It’s
00:46:13.120 –> 00:46:23.220
James Meads: it’s fine being able to do project meetings on Zoom, where it’s just a where it’s just a daily stand up or a weekly check in. But if you are having to influence and persuade people.
00:46:24.010 –> 00:46:38.670
James Meads: There’s no place but like there’s no place like doing that face to face. So I I do think that you can have a remote, a remote first procurement team, but I think, bringing them together, and and the expectation that they travel, and giving them the budget to do so.
00:46:38.670 –> 00:46:46.700
James Meads: you know, without making them fill out a three-page form when they want to take a €200 easyjet flight. You know some of the nonsense that we see in big corporates.
00:46:47.550 –> 00:47:05.670
James Meads: I I do think some in person time is is necessary, much as it pains me to say it as a as as the as being a big, remote work advocate. But I also am not a fan of a hybrid approach, and just having an arbitrary 2 days a week in the office, because what’s the point If you just going to sit there on Zoom calls all day.
00:47:06.450 –> 00:47:24.350
Clive R Heal: James, what do you think about virtual reality? When people start to put on headsets, and they’re they’re right there with the person in a in a verse type world. I mean that’s actually very different than the zoom call when she’s right in front of me, and she’s sat in my room right in front of me, on the table opposite me, talking to me. What are what are your thoughts about that?
00:47:24.410 –> 00:47:37.850
James Meads: Do you know what I don’t know in? I don’t have enough experience to be able to say whether I think it will work or not. All I know is that during Covid, when all of the conferences went online. it wasn’t particularly easy to network.
00:47:37.900 –> 00:47:43.210
Clive R Heal: Yeah, something about having a beer and talking to somebody over dinner or whatever then.
00:47:43.320 –> 00:47:54.780
Bill Michels: and I’m finding the same thing. We go to fire meetings, too. But the next question is, what do you all think? Do you all think there’s enough innovation within procurement as a whole?
00:47:56.110 –> 00:48:06.550
Clive R Heal: That’s you, Clive. Because you’re the innovation guy that that is a really really good question. I think the innovation is what in my mind draw. Okay, let’s take that back.
00:48:06.770 –> 00:48:13.250
Clive R Heal: I believe the role of procurement is to create and deliver value for the business. It’s not about
00:48:13.490 –> 00:48:21.920
Clive R Heal: holders, or whatever it’s more than that, it’s actually. How do you bringing value to your to your business ultimately for your your, your your customers.
00:48:21.990 –> 00:48:29.210
Clive R Heal: I think the way to differentiate yourself in that world is to be innovative and to create new value that
00:48:29.340 –> 00:48:39.670
Clive R Heal: it’s unseen before, if you like. And how do you do that? Putting a and B together to make to make Z or something so create something new that that people don’t. If people don’t expect.
00:48:39.890 –> 00:48:41.020
Clive R Heal: I I think
00:48:41.060 –> 00:48:48.990
Clive R Heal: for me it’s a big untapped opportunity in terms of Are we really really getting our suppliers
00:48:49.090 –> 00:49:03.850
Clive R Heal: creating innovative products and services to support us in terms Of what exactly do do we want? Are they bringing that innovation to us first? And I know people have, you know, a supplier day, and say, Bring us your ideas, and we might get back to you in a month’s time, and we might adopt one or 2 of them.
00:49:03.940 –> 00:49:07.060
Clive R Heal: But I think it’s way way more than that, in terms of how do you?
00:49:07.060 –> 00:49:24.380
Clive R Heal: How how do you use all your supply? Base as your research department, your R. And D. Department. Right? How can you tap into 1 one of the all the R. And D. Spend of your top 20 suppliers or top 50 survivors. If you could just tap into that all of a sudden. You’ve got all these people working for, you.
00:49:24.380 –> 00:49:42.560
Clive R Heal: you know, trying to create products and services that really meet meet your needs. And I think it’s an it’s it’s a resource that that we we in procurement can actually tap into if we can create the right environment, the right commercial trust, the the the the willingness to to have that mutual value creation.
00:49:42.680 –> 00:49:43.440
Clive R Heal: James.
00:49:44.780 –> 00:50:14.760
James Meads: Yeah. I think the innovation is there within procurement, but I think it’s been suppressed, and Companies Haven’t particularly wanted it in the past, you know, if you I saw it. I saw a job description yesterday on Linkedin. It was a it was a German start up some sort of water, but plastic water bottle technology company. So it was this Really, really it was a really cool hips to start up is what i’m saying, and they had something like 200 applicants for a for for for a senior category manager role. And I think the reason why is because
00:50:15.190 –> 00:50:31.700
James Meads: a the company is quite inspiring and be the job. Description was was, was was just really written to, to, to to attract someone that is, maybe in their late twenties or early thirties, and has a lot of new ideas. But if you look at a lot of the job descriptions for
00:50:31.700 –> 00:50:43.880
James Meads: relatively run of the mill category manager roles, you know, you just turned off by the money. They just look so boring. And you think God I would I would after 6 months I would be bored in this role.
00:50:45.110 –> 00:50:45.750
Bill Michels: Yup.
00:50:45.800 –> 00:51:14.630
Bill Michels: and My experience is that whenever I’ve focused our our supply base on critical problems and looking for solutions or opportunities, they’ve always come through, and I can. I can think of like 5 or 6 examples where really got some innovation that we wouldn’t have gotten without the supply base. But you have to have, like, I said, Commercial Trust. They have to trust you, and and they have to have some kind of reward for making a huge investment in R. And and if you know it’s got to be
00:51:14.630 –> 00:51:43.530
Bill Michels: a reward in terms of value and an opportunity, and and and longevity, and and but I’ve seen. I’ve seen other companies where they asked for innovation, and then they take the innovation out and they shop it on the marketplace, which you know. I I don’t think they ever they ever build those the trusting relationships with suppliers, so no one would ever trust them. So I think you have to really really have to really focus them. You You can’t give it to everybody you’ve got to pick. Who’s going to be your innovator, partner, and then who you’re going to drive. I’ve got one more question
00:51:43.560 –> 00:51:53.480
Bill Michels: just come in, which is, do you think companies are nervous to make changes and inject innovation? Or are they to set in their ways.
00:51:54.170 –> 00:51:54.960
Clive R Heal: James.
00:51:56.740 –> 00:51:58.770
James Meads: I think the companies
00:51:59.250 –> 00:52:07.710
James Meads: are open to it. I think just individuals in certain positions are are the other ones that are the ones that prevent it from happening.
00:52:08.970 –> 00:52:35.560
Bill Michels: I agree with that. When you think about change, there are people that not invented here is a I. I work for a company once said, only wanted patentable ideas, and they created a a disaster of a product that the suppliers had to come in and fix and and and and not invented. Here’s a bad thing. Don’t want to change my my old process. You hear all of those things, and that’s where you need to really use your influencer skills your relationship skills and your presentation skills to break through that
00:52:35.690 –> 00:52:38.100
Bill Michels: through that and get the innovation. 5
00:52:38.130 –> 00:52:40.390
changes a risk to
00:52:40.690 –> 00:52:45.000
Clive R Heal: human beings, to people the human subconscious
00:52:45.270 –> 00:52:57.590
Clive R Heal: fights and resists change because it’s an an unknown and can be a danger to the organism that supports the brain and and so on. And so what you find is, you have to find ways of
00:52:57.680 –> 00:53:04.570
Clive R Heal: of overcoming that that overcoming, that that that natural concern, a re a reluctance to
00:53:04.940 –> 00:53:06.970
test something really, really.
00:53:07.170 –> 00:53:27.140
Clive R Heal: really new. And so how do you create that? And, in fact, there is a some linkedin dialogue this morning on that, in terms of do you create an inspiring vision where people want to follow you? Or do you create a burning platform where, hey? We got jump because we got that choice, and they’re going to get rid of procurement. Right? So so you know. How do you? How do you create the atmosphere for that? But I think in terms of the business
00:53:27.320 –> 00:53:28.340
Clive R Heal: there are.
00:53:28.500 –> 00:53:37.100
Clive R Heal: There is certainly that there’s certainly a range of individuals that you work with. There’s the individuals you work with who want the full weight cake. Right?
00:53:37.100 –> 00:53:57.000
Clive R Heal: Don’t. Bring me a new idea unless you actually got it totally worked out. What are the costs? What are the risk? What’s the action plan? Well, the contractual implications. What are the resources we’re gonna need? Why should we change unless you can bring them all that they’re not open to it. But then, at the other end, you’ve got other end of the the of that sort of gamma right that that that that that range
00:53:57.000 –> 00:54:16.150
Clive R Heal: You’ve got the sort of bubble people, and you can take the idea to the bubble person, you know, and it’s just an idea we don’t have it worked out yet. We full of this. We’re gonna try it. Do you want to do some do business partners support that? Yeah, we’ll give it a go. Let’s let’s go for it and you. So you find this diversity of approach people in the business as to whether they
00:54:16.150 –> 00:54:17.860
Clive R Heal: they they want everything first
00:54:17.860 –> 00:54:38.510
Clive R Heal: buttoned up before they’re willing to take the risk or no, they trust you, and that sounds a really good idea. Let’s go. Let’s go. Look at it. So, understanding. Your business partner is important here in terms of what type of person are they? I mean, I know one or 2 people like. If you didn’t take them the whole bait cake. They will shoot it down every time, right, because that’s who they are. But then there’s other people who tended to be the more
00:54:38.510 –> 00:54:47.660
Clive R Heal: more advanced should we say, the the more successful we say, yeah, that’s a great idea, Clive. Let’s get let’s go, try it. Let’s go do it, and if it works great, and if it doesn’t, okay, we learn from it.
00:54:47.880 –> 00:55:15.870
Bill Michels: And I I found that sometimes the the resistance comes from. They don’t have the resource. They’re working on the new new products, and they don’t want to spend the time, energy, or effort. I went. I was in the automotive industry once, and we had piled up a 1 million dollars worth of ideas, and and they were all like no Don’t have the resource. We got to focus on the projects we’re working on, and I brought it to the CEO, and it said you got a 1 million dollars sitting there, and he said, Well, it it only cost me a couple of 100
00:55:15.900 –> 00:55:34.900
Bill Michels: the $1,000 to bring in engineer to run just those projects through, and and that’s what he did. But it didn’t reach a high enough level, and and there’s a lot of resistance, because I think resources are short and well, people just don’t want to look at something they’ve looked at before, and innovative ideas always have to be good enough.
00:55:34.900 –> 00:55:49.930
Clive R Heal: The the business is willing to give you the people and the resources from other projects. No companies have. People sat on the sidelines waiting for a good idea to come in, and when it comes in up they hop off the bench. Right? You’re having to borrow steel. Take people from other initiatives other piece of work. So
00:55:50.030 –> 00:56:05.800
Clive R Heal: the ability to create a compelling work case, a business case that gets you those resources is the key to implementing implementing innovation. It’s not about coming up with 10,000 ideas, because you can do that. If you got the right process and people and so on. It’s actually about
00:56:05.800 –> 00:56:18.150
Clive R Heal: creating and selling the business case. You can implement and and secure the value. Innovation is, is about delivering value. It’s not about coming up with 10,000 ideas which may have potential value. It’s about actually
00:56:18.150 –> 00:56:29.080
Clive R Heal: getting it in place, and they can’t happen so so we’re at the end of our program, and we have the more questions. So why Don’t? We each have a a final thought, and and we’ll close out the Webinar. Bye.
00:56:29.360 –> 00:56:31.190
I say, James, go ahead, James.
00:56:31.390 –> 00:56:32.330
Clive R Heal: our guest.
00:56:32.410 –> 00:56:46.930
James Meads: I think I I would just. I would just continue that that that previous topic to close out, and I think that with with the rise of the gig economy and with procurement expertise, you know, real, deep subject matter, expertise.
00:56:46.970 –> 00:56:51.740
James Meads: becoming more and more rare within corporate procurement teams around certain categories.
00:56:51.790 –> 00:57:04.440
James Meads: I think that that will provide the business case to to do those, you know, as as a risk. Risk is a risk is another thing. But I think the resource argument will start to go away if there is a business case, because
00:57:04.440 –> 00:57:27.690
James Meads: now that there are platforms out there that you know, if you 10 years ago the gig economy was basically just marketing and web development. But now it’s a. It’s a lot more diverse, and there are platforms and and ways to bring on freelances in in the procurement space that that aren’t just working to the typical 6 months interim manager bomb on a seat for a fixed day. Right type of model, and I think, is that
00:57:27.690 –> 00:57:37.820
James Meads: as that matures, we will see companies flex more and more with with bringing in skilled contingent labor to to manage these types of things, to to deliver more value.
00:57:40.580 –> 00:57:42.770
Clive R Heal: I’ll i’ll i’ll pick up, I I think.
00:57:42.790 –> 00:57:53.220
Clive R Heal: obviously changing the whole for come up operating model in terms of how we, how we interact with the business, how we interact with suppliers leveraging the technology that’s coming in.
00:57:53.290 –> 00:58:09.200
Clive R Heal: But for me, the other big thing is about the personal relationships. How can you make that connection with people in the business with suppliers that gives you access with the suppliers, gives you access to create new value, and then bringing those value, opportunity, pathways back to business.
00:58:09.200 –> 00:58:20.570
Clive R Heal: We can do this. It’s gonna cost us this. These are the rest. These are the potential upsides. Or we could do this. What do you? What do you want to do? And so that whole creativity to be able to do the mutual value creation with the suppliers.
00:58:20.570 –> 00:58:29.870
Clive R Heal: to bring back new opportunities and new value. It definitely is the most exciting time ever to be in procurement right now. We’re on the Roller coaster, and it’s getting fun.
00:58:29.870 –> 00:58:59.600
Bill Michels: and i’ll I’ll calls out because we got one last question, and I don’t want to leave it. Leave anybody out there with an unanswered question. Do you think companies gate keep some ideas, but by doing so they can’t advance them as they can’t talk to others that might be able to execute it. I think what you have to do is you really have to put those together, and and you have to build a build a business case for it, and you got to present that business case to someone that’s going to listen, particularly if you’ve got a high return on investment
00:58:59.600 –> 00:59:06.600
Bill Michels: in my own career. I I had a opportunity that came through where I was changing from one supplier to another.
00:59:06.600 –> 00:59:24.280
Bill Michels: and the senior management that I was working with and procurement didn’t didn’t want the that to happen. It was a 1 million dollar idea, and I I pushed it up above to the senior management, he my internal management wasn’t happy. But once they saw a 1 million dollar idea, and as 5
00:59:24.280 –> 00:59:53.760
Clive R Heal: through 5% margin Food Company the idea took hold and we were able to make the change. But we got 30 s left. So sorry to cut you off on that. That’s gonna say thank you very much today for James Mead. Great to be talking with you. Thank you so much for being on our on our Webinar today, Bill, as always. Thanks very much for coordinating things and and doing the questions and thanks to everybody for joining today, we’ll have another session in a month’s time with another guest talking about procurement where we see it going. But.
00:59:53.760 –> 01:00:06.900
Clive R Heal: thanks to everyone for joining today and obviously procurement software. That site is definitely a going to place. And if you’re interested in negotiation training, we can talk to you about that as well. So thanks, everyone. Have a great day. Take care, thank you.