By Proxima

13 Jan 2020

Why is all the talk on new trends, when doing the basics right is still a challenge for many organisations? Proxima offers advice for those organisations enticed by promised developments who still need to nail the basics 


Welcome to 2020, not just a new year, but a new decade, a time to be reminded of all of the predictions from the last decade and bombarded with those for the next. Like many, I love new stuff, and especially the gadgets that promise to make my life better. I love the new driver that promises to put a whopping 5 more yards on a golf swing I can’t control, and I love the latest app that will make me lose weight quicker. I’ve bought the bike that will make me go faster and I’ve tried some shampoo that will make my hair grow back. When it’s promised, I am all too often seduced by possibility over practicality. So for those still wrestling with the basics, here are five ways to tackle the practical whilst being seduced by the possible…

Just what are the next shiny, new things to hit procurement? Well log onto your email or pop onto your favourite trade website and it won’t take long to find out – the articles abound: “Click here for the top 5/10/50 trends that will transform your commercial team”; “Implement this new thing and you are guaranteed to save money on the 3rd-party spend that you can’t currently see or control”. Brilliant. Job done. What a time to be alive and in commercial!

The reality is that many of us are not at the bleeding edge when it comes to procurement innovation. So while all of this chatter is fascinating, there is a real risk that ‘the possible’ gets in the way of what is practically achievable for the many, not just the few (will that catch on?).

In 2020 those commercial functions who focus on properly embedding some of the procurement fundamentals may actually achieve far greater things and set themselves up for an innovative 2021!

If Santa didn’t bring you £millions to spend on innovation, what might your more practical new year’s resolutions be?

 

Getting data (Spend) transparency

How can you accurately assess how good your cost base is if you can’t say for certain what you currently spend, with whom and on what? It is hard to believe, but many organisations still do not have full visibility of their third party spend, nor do they have an understanding of what the total cost of ownership (TCO) is for a given product or service.

Attention is given to the obvious costs – the unit prices or labour rates – without consideration given to the plethora of other hidden costs that are affected by a given change.

In today’s world, data management is complex with multiple sources of information and, in many cases, only Excel to make sense of it. Yes, smarter tools and tech would help, and yes commercial specialists often have one hand behind their backs, but let’s assume that the tech isn’t available yet –some practical steps can also be taken.

There is a lot to do for many, but starting with simply instilling good employee data management behaviours and offering training in data analysis will provide significant improvements in the quality of baselining and understanding of actual costs, thereby providing better materials to have better conversations, make informed decisions and create more relevant and lasting outcomes.

‘Today’s commercial professionals need to be able identify the difference between needs and wants, as well as when it’s important to challenge assumptions’

Understanding your customers

Sounds simple, but it can be hard to decipher the needs of an organisation. Notwithstanding the need for excellent working relationships, today’s commercial professionals need to be able to identify the difference between needs and wants, as well as when it’s important to challenge assumptions. But it doesn’t end here, they now also need to be able to explain and document all this in a way that can be understood by suppliers. This can get very complex and it’s not surprising that there are many examples in both the private and public sectors where failures here have led to supplier failures, 7-figure pay-outs, and a whole load of wasted time.

Being a good commercial professional is about more than ‘order taking’ and working with policy makers and stakeholders is a perfect opportunity to both test conventional wisdom and inject creative thinking. Don’t just take orders! Have a bit of fun with it and see how focusing as much on the ‘why’ as you do on the ‘what’ can drive better engagement, operational efficiencies and improved outcomes.

Don’t blindly re-tender the same old service to end up with the same old outcomes. This is where your team can learn new skills, make small changes and add significant value.

 

Learning how to collaborate

It’s alluded to above, but thinking about how you can be more collaborative as individuals and teams could deliver a big boost in productivity, innovation and morale in 2020. At the risk of causing upset, procurement is a function designed around process. Many functions exist to run the process and this can create a head down mentality. 2020 is the year to look up. 

Today’s procurement professionals are most successful when they can build relationships across the business and utilise skills and knowledge from a wide cohort of colleagues. All too frequently the solutions that are implemented are not fit-for-purpose as key pieces of information were missing from the initial brief. Ensuring that the right people are consulted during planning and projects will go a significant distance in delivering the right solutions and safeguarding success.

This might mean training teams have to go a little outside of their comfort zones, give a little more of themselves to their peers, and request the same in return. But imagine if you had two brains and not one? Well you can.

 

Improving contracting & contract management

This is another often neglected and under-invested area and consequently a primary cause of value erosion during a contract lifecycle. All of the efforts made to ensure the right outcomes need to be tied up in an effective contract that works for both parties. Step one.

Step two is the management of the contract. But without the right incentives in place or the right people assigned to do the managing, organisations (and suppliers) lose out. Sometimes even the best intentions deteriorate into box-ticking or an opportunity to go out for lunch once a month.

Sometimes organisations develop so much distrust in their suppliers, they are blinded to the opportunities that they could bring to their organisation. A simple way of looking at it is that the combined R&D budget of your suppliers will be many times that of your own organisation, and so you best chance of improving services and outcomes may depend on how well you work with suppliers.

Relationships should never become adversarial by design. This is only a small mindset shift. Make it in 2020.

 

Raising procurement’s profile

If you are working on all of the above then you stand a good change of raising the function’s profile, and the impact that it makes. Here is a small test:

If stakeholders contact the commercial team to say, ‘We’ve got this supplier and have agreed a deal, can you just negotiate the contract/approve this PO/add them on the system for us?’, or, ‘we want to work with this supplier, can you run a tender that selects them’, then you are still doing something wrong, or you are still developing…

When seeking to raise the profile of a commercial function it is important to have a good story to tell and a compelling reason to change current practices and work with procurement. Addressing some of the basics can do just that.

Plus, if you are good this year, and prove yourself ready for it, then you might just get some of that bleeding edge technology next Christmas.

Click here to read Proxima's report 'The Capability Conundrum: Resourcing Challenges in Government Commercial'. 

Read the most recent articles written by Proxima - Why COVID-19 doesn’t mean that developing at pace needs to grind to a halt…

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