From my time as a Procurement Director, I know how important it is to get the global procurement team all together every quarter or two to get aligned and inspired. Today I’m going to highlight why these sessions are so important, and outline the key takeaways from a recent kick off meeting with a new top 10 global pharmaceutical customer, where the Vizibl team ran through the necessary steps towards creating a successful Supplier Collaboration programme.
By inviting external speakers with a fresh perspective on procurement and business in general to global procurement team sessions, we can inspire the team to start thinking differently – it’s the opportunity to alert the team to things they hadn’t considered before that makes these sessions worthwhile. There’s nothing better than an outside perspective for triggering these lightbulb moments.
In my new role as Principal Consultant at Vizibl, I now get to experience these sessions from the other side, as the external speaker. It’s great to be the one bringing new principles to our customers, and to offer examples of how to use these principles to overcome common challenges that enterprise companies face.
Within a global enterprise, logistical barriers and time constraints might make it seem too challenging to bring all procurement team members together every quarter. But it’s necessary to make these ‘jam sessions’ happen – at least twice a year! There are two main reasons why:
Procurement as a function can exist in something of a silo, with a laser focus on cost and cash. In enterprises especially, there is often a considerable distance between the procurement team’s day-to-day duties and the strategic direction of the company as set by senior executives.
Global team sessions allow the strategic priorities of the business to be communicated to the whole procurement team, regardless of seniority – at the same time, with the same consistent message.
Here larger challenges the company is trying to overcome – from supply chain resilience to breaking into new markets, or meeting sustainability targets – can be re-emphasised and set in the context of procurement’s role both today and in the future.
Perhaps the most important reason for these sessions is their potential to engage and inspire the procurement team, refreshing each member’s mindset. With only a few opportunities a year to get everyone in the ‘same room’, away from their day-to-day responsibilities, it’s important to make the most of them. These sessions should ultimately underline the enormous contribution procurement can make to business outcomes.
To do so, I believe ‘bringing the outside in’ by inviting external speakers to recount their experiences or share their expertise is a must. This brings inspiring new thinking into the procurement function, serving as a great reminder to the team of why they do what they do. It also illustrates the positive impact that a new mindset and new ways of working can have on procurement’s capacity to deliver, and ultimately on overall business success.
As bursts of inspiration are critical to any team, it’s valuable to invite speakers who are prepared to talk on thought-provoking, energising topics. To make for an engaging session it should:
We were recently asked to participate in one such session by a Vizibl customer – a major international pharmaceutical company looking to take their procurement practices to the next level. Here’s some context on their challenges, and a taster of what we covered with them.
This pharmaceutical company’s procurement team is already proficient at the fundamentals. To use a phrase I have ‘borrowed with pride’, they are well-versed in ‘keeping the lights on’.
Keeping the lights on is about managing the costs and the cash, the quality and the service – the fundamentals. This is obviously highly important. However, the company’s procurement function is now looking to generate additional innovative opportunities to drive the business forward – creating top line growth, and supporting the company’s sustainability commitments whilst continuing to meet bottom line objectives. To generate these opportunities, the team must begin collaborating with key suppliers and partners. Without optimising their infrastructure, mindset, and ways of working, they risk leaving money on the table.
Vizibl CEO Mark Perera and I were very pleased to run the team through how Supplier Collaboration can help capture this untapped value.
McKinsey has found that large organisations that regularly collaborate with their suppliers demonstrate higher growth, lower operating costs, and greater profitability than their peers.
To start reaping the benefits of supplier collaboration, there are a few things to consider:
While Supplier Collaboration presents a considerable opportunity for this pharma company to scale their successes, it’s paramount to ensure that collaboration opportunities in innovation and sustainability become integral to the individual and team goals for procurement.
Bringing the strategic goals of the business to procurement helps to set the ‘north star’ for the procurement function, ensuring that all team members are aligned around the same objectives, and following the same direction of travel.
These wider business objectives being reflected in the goals of a Supplier Collaboration programme ensures all the needs of all stakeholders are being met. These stakeholders include internal business leadership from all functions, shareholders and supplier partners.
One thing we were keen to stress during the session is that spend shouldn’t be the only criteria in determining which suppliers to work collaboratively with. The biggest suppliers are not necessarily the most strategic suppliers.
It is helpful to look beyond spend towards factors such as predicted revenue impact, strategic business alignment, and innovation potential – these are all predictors of value.
Broader business objectives will inform this selection. If the aim is to bring new products and services to market faster, for example, then key suppliers are likely to include small, innovative start-ups who are working on novel technology, alongside larger suppliers with strong R&D capabilities.
Whatever the goal, it’s important to avoid trying to boil the ocean. Staying agile by initially keeping the group small and focused offers the best chance of success. Once successful, there’ll be opportunity to scale. For a large enterprise business moving towards Supplier Collaboration, selecting 2-4% of total suppliers as strategic is a good ballpark to begin with. This enables close collaboration with key suppliers, allowing the procurement team to demonstrate their significance to the business.
While segmentation is a key step, selecting these strategic suppliers is not the same as collaborating with them. In order to fully capitalise on each relationship, businesses should be seeking ‘customer of choice’ status with these suppliers.
What does this mean? A ‘customer of choice’ is a business that positions itself to receive the best access to ideas, resources, and innovations from a given supplier. It does so by building a truly two-way partnership based upon a foundation of trust and mutual benefit.
Often, this will require a fundamental shift in mindset, relationship model, and procurement processes to become more agile and supplier-friendly. You can read more on how to become ‘customer of choice’ with key suppliers, with tips from Unilever’s Chief Supply Chain Officer Marc Engel, here.
It is essential to track and prove the value of any work. This is especially true after launching a new approach. Without quantified success, it can be difficult to scale a Supplier Collaboration programme and sustain its benefits. These insights are also essential for improving your approach over time.
Unfortunately, managing supplier relationships and measuring supplier performance is exceedingly complex. Even across the small cohort of suppliers this pharmaceutical company was looking to collaborate with, information can quickly become siloed, projects stall due to lack of accountability, and the data needed to make informed decisions is hard to access and aggregate.
Thankfully, Vizibl technology gives the team considerable help. The customer will use the digital platform to build the foundation for best-in-class Supplier Collaboration; our solution allows procurement to align on strategic goals with suppliers, manage relationships and teams, work collaboratively with suppliers on joint projects from one central workspace, and add custom value trackers to prove the impact of that work. Real-time ‘single source of truth’ data and an open API for easy integration with other tools means full visibility over relationship health, project status, and overall performance against established goals.
To secure competitive advantage, every business needs to work more effectively with their supply chain. Visit our Platform page to find out more about how Vizibl can support that collaboration.
