appoint procurement

APPOINTP R O C U R E M E N T

THE SPRING/SUMMER 2015 EDITION

HOW PROCUREMENT WORKS WITH OTHERS

THE GLOBAL MAGAZINE FOR REED. FIRST CHOICE FOR RECRUITMENT

http://www.reedglobal.com/procurement

http://reedglobal.com/hr

2 Spring/Summer 2015 | Procurement

Inside this issue

3 How to: Nurturing collaborative relationships with non-procurement colleagues across the business has become a vital part of the procurement professional’s skill set. So how can procurement engage its internal stakeholders?

4-8 Need to know: Top 5 worst supply chain disruptions in 2014; The new Public Contracts Directive, which implements the 2014 EU Public Sector Procurement Directive; Top 3 steps to becoming a procurement role model; CPOs’ 9 priorities for 2015

9 Market overview: How can recruiting companies work better with their agencies? Now that candidates have the upper hand in the UK jobs market, recruitment agencies must invest more time and resources in attracting candidates, planning campaigns and interviewing, says Lee Gudgeon.

10 Supplying the best:

How do you build a highly successful team? New videos by REED highlight our thought leadership and top career tips.

FEATURES

NEWS & VIEWS

NEWS & VIEWS

PROFESSIONAL PRACTICE

The candidate-led market that we are now in has meant recruitment specialists at REED have had to work a lot smarter at their candidate engagement and sourcing strategy, according to Lee Gudgeon, business development director. It also means recruiting companies must work with their agencies to establish a strong partnership in order to understand their needs. Supplier relationship management is a vital skill for procurement professionals, but so too is stakeholder engagement. Procurement professionals must prioritise successful relationships with internal and external clients to get ahead.

Time to prioritise relationships

welcome p2

3

Collaborating with other departments in the organisation is essential for procurement to get its job done and raise its profile

Collaboration

“Procurement functions are often separate from the rest of the

organisation”Spring/Summer 2015 | Procurement

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How to… engageinternal

your

stakeholders


Collaboration

Nurturing collaborative relationships with non-procurement colleagues across the business has become

a vital part of the procurement professional’s skill set. Such collaboration can create value and ensure that procurement principles are established for every penny the business spends. So how can procurement engage its internal stakeholders?

Listen and learn Procurement functions are often unfairly tarnished with an image of being the company cost cutter which has no understanding of what other departments in the business do, much less any of the so-called softer skills needed for a successful relationship with internal stakeholders. Get back to basics and arrange meetings with the senior staff in the departments in your organisation that you need to deal with. What technology needs does the HR department have and why? How does the marketing function measure the return on investment of an advertising campaign? What challenges does the IT department face? How do departments measure what they cannot quantify? Even if procurement functions have little control over the indirect spend of these departments, listening to what kind of environment they work in, what the pressures are and how they think they can be solved will provide vital intelligence for the day when procurement does have more control over other departments’ spend. Rather than assuming that they work in a certain way, ask them about their goals and targets, and the challenges they face in meeting them.

Communicate The downturn forced organisations to focus on costs, and with that, the profile of procurement grew. In fact, while no business function was left untouched by redundancies, procurement fared rather well. Yet procurement functions are often separate from the rest of the organisation, with few departments understanding what it does or how important it is. Organise lunchtime briefings for other departments offering top tips on procurement, such as how the tender process works. Show them the knowledge and experience you have of creating innovative solutions in partnership with suppliers, and what effect this has on the company’s spend. Write short blogs on the company intranet or ask to present at all-staff meetings about procurement processes. Raise your profile among your colleagues, so that their first impressions of you are not just during the tender process.

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Speak the right language Jargon typically results in increased distance between professionals from different functions. But instead it should be considered short-hand for complex concepts that would otherwise take time to explain – when deployed correctly it is very useful. If you’ve been explaining to other departments what procurement does, the necessary jargon will be clear to them. As a rule, don’t talk in procurement speak, but at the same time this should not stop you learning the language of finance, HR or marketing. Successful professionals take the time to understand the terminology that different departments use, which in turn enables them to understand the challenges they face and perhaps offer solutions to their problems.

Consult and engage Internal stakeholders within other departments may have a barrage of suppliers approaching them. This offers a chance to sell your skills as a procurement professional, consult with them on ways of assessing their services providers, or utilising suppliers’ knowledge and experience to innovate within their own department. Learn about best procurement practice from peer functions in other organisations, and share those lessons. For example, best performing marketing functions may approach procurement in an entirely different way, and you can share these lessons with your own marketing function.

Get feedback Developing an effective and mutually beneficial relationship with internal stakeholders means getting feedback on what procurement professionals do and how they do it. Not only does this show other stakeholders that you are willing to listen to them but it gives you an opportunity to assess and amend your own function’s operations.

Collaboration p5



Need to know

TOP 5 WORST SUPPLY CHAIN DISRUPTIONS 2014

1 Typhoon Halong, South East Asia

Damages: $10+ billion

Recovery time: 41 weeks

2Severe flooding, Long Island, New York, US

Damages: $4+ billion


3Typhoon Rammasun, South East Asia

Damages: $1.5 billion


4Gas explosions, Kaohsiung, Taiwan

Damages: $900+ million


5Hazardous chemical spill, Arizona, US

Damages: $900+ million


£20 billion – amount wasted each year by global companies because they do not share information about suppliers.

20% – proportion of directors in companies that are paid late and who have taken a salary cut to keep cash inside their businesses.

TOP 3 STEPS TO BECOMING A PROCUREMENT ROLE MODEL

IDENTIFY AND RESOLVE OPERATIONAL

WEAKNESSESWhere is procurement weak, how can inconsistency be reduced and how can you align with your internal and external stakeholders?

EMBRACE THE COMPANY’S AGENDAIs your entire team synchronised not just with their own objectives, but with the objectives of the entire company?

MAKE INNOVATION A PRIORITYUse procurement’s unique ability to get ideas from suppliers to encourage innovation in the company

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The bidding process for public sector contracts has been made easier for suppliers – particularly small and medium-sized businesses – to enter the tendering process. The new Public Contracts Directive, which implements the 2014 EU Public Sector Procurement Directive, sets out a number of procedures which must be followed before a contract is awarded over the value of £10,000, unless it qualifies for a specific exclusion, such as being on the grounds of national security.

All organisations – including central government departments, local authorities and NHS bodies – must now make publicly available electronic versions of the procurement documentation online. They are also encouraged to break

contracts into lots to facilitate the participation of SMEs. Contracting authorities will not be able to set turnover requirements for suppliers at more than two times the contract value.

More sustainable and better value procurement will be instigated by taking full life-cycle costing into account when awarding contracts. The government hopes contracting authorities will be able to run procurement exercises faster, and with less red tape.

For further information, Click here

“Procurement is an incredibly important part of the business. You are probably representing 60-70 per cent of your company’s costs. It’s important to get that right.” Sam Walsh, CEO, Rio Tinto

“We need to look beyond our traditional strength of cost reduction. I know that people in procurement often have ideas about transforming the business. You need to find a way to make yourselves heard – smart CEOs will always look for and listen to great ideas.” Babs Omotowa, CEO, Nigeria LNG

“What gets measured improves.” Peter Drucker, management writer

“Too many companies believe people are interchangeable. Truly gifted people have unique talents. Such people cannot be forced into roles they are not suited for, nor should they be. Effective leaders allow great people to do the work they were born to do.” Warren Bennis, management writer

Soundbites

Need to know p7

LAW CHANGES

https://www.gov.uk/transposing-eu-procurement-directives

http://bit.ly/1IspVIj

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Need to know

1 Elevate the role of procurement to trusted adviser

2 Reduce/avoid purchase costs

3 Improve procurement’s business agility

4 Expand scope/influence

5 Deepen influence on complex indirect spend categories

6 Enable innovation, by studying what suppliers do

7 Increase the satisfaction levels of internal stakeholders

8 Reduce supply risk

9 Improve suppliers’ delivery performance

Source: The CPO Agenda, Key Issues for Procurement in 2015, The Hackett GroupSpring/Summer 2015 | Procurement

CPOs’ 9 priorities for 2015

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p9Market overview

Candidates have the upper hand in the UK jobs market right now. So, how can recruiting companies make savings on their recruitment spend? Lee Gudgeon, REED business development director, explains

For the recruitment industry as a whole the current candidate market makes it harder to not only source, but also secure candidates

for our clients. In addition to the increased investment of time and resources in attracting candidates, planning campaigns, managing the offer process and securing candidates require increased attention. Managing the offer process effectively is critical as we have seen the number of counter offers increase by 300 per cent in the last 12 months. Reducing the candidate drop-off rate because they have more options is a key part of our service.

This is great news for candidates and it’s important for our clients to respond to the marketplace to ensure they are able to fill their vacancies and skills gaps. However, in such a mature and candidate-led market it creates challenges for recruiting companies looking to make savings from their fees to pass on to their clients. For recruiters, the candidate-driven market has truly driven a need for them to either increase their fees or dramatically change how they operate.

Businesses have focussed on reducing the cost of recruitment agency fees since 2008. We’re

really at the bottom end of the cost for this highly procured resource, so as a business we have been working with our clients to drive savings from alternative avenues.

Having a purely transactional relationship with a supplier is not always appropriate for something as important as recruitment. Managed service or exclusive relationships offer an extended, more strategic way for organisations and their recruitment providers to work together. Commitment from clients to remain in a contract with a recruiter for a number of years can enable that recruiter to offer specialist and tactical guidance to reduce the time to hire and implement cost avoidance plans, which can be measured as savings which are passed back to the recruiting organisation.

For example, we can have a more strategic conversation about total workforce management, and how organisations can blend their temporary and permanent staff operations. Rationalising suppliers and consolidating processes such as invoicing can contribute savings to both costs and time.

But it’s time to have a more strategic conversation about how workforces are managed more generally, so that organisations can better plan for future recruitment needs and assess what

their current workforce looks like. Employers need to get total visibility of their workforce. Where are the gaps? Should temps be made permanent?

Even though most temporary worker contracts include a fee for moving from temp to perm, frequently we find that employers have temps on their books so long that the fee is waived anyway. Not only do employers potentially avoid the fee but they have an inducted, trained member of staff, with a reduced time to hire and greater productivity, morale and less hassle for managers.

We also need to consider how social media and technology is deployed to recruit staff members. Technology has transformed the visibility and control of both companies and candidates. Recruiting companies must engage with social media – which is free currently, but may not always be so – to attract candidates, particularly as attraction costs are rising. Engaging with a supplier that can implement a social media plan is another way of looking at cost effective candidate attraction.

It is solutions such as these that can significantly save companies on their recruitment costs. But employers have to start viewing recruitment agencies as partners rather than as a transactional relationship.


Career tips

How do you build a highly successful team? What’s the best way to advance your career? Three procurement directors have outlined their tips and

advice in best practice videos by REED

Supplyingthe

BestT hree procurement industry leaders have taken part in the first set of

videos by REED as part of the recruitment consultancy’s new approach to thought-leadership.

Chief purchasing officer at Britvic Soft Drinks and winner of the CIPS Procurement and Supply Chain Professional of the Year award in 2014, Fabienne Lesbros, Andrew Newnham, chief purchasing officer at ITV, and Chris Ayscough, purchasing director at SITA, have all starred in the new videos.

The three professionals discuss topics including supplier relationship management, building an effective procurement team and how organisations can go about changing their procurement strategy. They also discuss the all-important career tips for professionals hoping to climb the procurement and management career ladders.

Their insight has been captured in part animated/part interview-style short videos in which finely-tuned questions immediately get to the heart of what achieving success in the sector really takes.

With a heritage stretching back over 50 years, Reed Procurement & Supply Chain is at the forefront of the UK’s procurement

and supply chain recruitment market.

Five decades of experience have facilitated the development of unrivalled expertise, and with clients across the UK and industry-leading levels of integrity and professionalism, combined with pioneering uses of technology.

REED sees its enviable position as a leading consultancy as an opportunity to promote best practice for the wider good of the industry. Video, with its unparalleled value as a content medium, is the obvious channel through which to convey the best practice message, and direct communication with key players in the sector was chosen as a means of generating astute and engaging content on the subject.

To date, three videos have been produced, which will be available on reedglobal.com, LinkedIn and Twitter, and will appear on recruiter.co.uk and supplymanagement.com.

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Fabienne Lesbros CPO, Britvic Soft Drinks

Andrew NewnhamCPO, ITV

Chris Ayscough purchasing director, SITA

http://www.reedglobal.com


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