Deloitte and Coupa discuss how CPOs are leading the way in agility


On May 13, two leading organizations from a) sourcing transformation and b) sourcing technology perspective came together to discuss what they are seeing with their customers on how digital is fundamental to making their business operations resilient, and how “agility” is essential to make this happen.

The master of ceremonies for this 60-minute webinar was our own Director of Research, Pierre Mitchell, who noted that: “Agility is no longer a buzzword, but a business necessity, and leaders of management are showing the way. ” He was joined by Michael van Keulen, Chief Procurement Officer at Coupa and Max Goralnick, Managing Director at Deloitte Consulting to reflect on why this is shaping up to be the case. These speakers are deeply experienced and engaging. Michael has led purchasing at lululemon and VF while Max is a colonel in the Marine Corps Reserves (with 20 years of active service) and also a 16 year “veteran” at Deloitte (i.e., no shortage of actual war stories).

Relying largely on the results of the 2021 Deloitte Global Chief Procurement Officer survey, in which 400 CPOs from around the world shared their views (and of which Pierre Mitchell was a co-author), the three experts give their point view “from the trenches” on how digital offers agility to reduce complexity. This complexity comes from disrupted supply chains, volatile supply markets, limited spending and impatient demands from stakeholders – and even suppliers, as they explain below.

How do you find the right procurement technology to help drive business agility? Spend Matters’ New 5-Step Procurement Technology Buying Guide Can Help.

“Sourcing is at the limit as we deepen our supply chains, giving them a big picture of the entire hemisphere we live and participate in,” Pierre explained. “This is why purchasing managers are intrinsically linked to the success of business continuity and resilience in the future. Never before have we heard the word “ supply chain ” mentioned in so many ways and by so many media, and it is because of the real risk that currently exists that organizations have to deal with risks such than geopolitics, cybercrime. security, commodity price fluctuations, and more. “

He invited Michael and Max to bring up the topic of risk and agility and comment on the market, a market where 56% of CPOs say they have failed vendors, where 36% experience performance failures, where 33% lost income due to supply shortages, and where 30% saw a negative impact on working capital. It is not an image of resilience and continuity of supply.

How can businesses manage risk and build resilience?

“It’s a bit of a mole over there right now” – Max compares it. “And that’s not what I would recommend. As we move forward, we really need to look at risk – in all its size and complexity, as we’ve seen before with tsunamis, volcanoes, and now the pandemic – across all sectors. You have to take a deliberate approach to all of its elements. It means finding the most critical risks for your organization, making plans for them, and understanding the unknown as much as possible. “

“We’ve been proactive in getting technology to help solve this problem and bring it into the expense management space,” says Michael. “What I can say is that it starts with full visibility of spending in the supply chain and an understanding of your level of reliance on raw materials and plans in place even for those who , in your opinion, will not be affected by the disturbances.

This is where diversity has its day. Where once concentrated supply allowed you to leverage spend, we see diversity as a critical aspect of a larger risk landscape and business requirements compliance – risk is not. a siled thing, it affects everyone.

Pierre then discussed the challenges related to internal / external risks and asked what were the main issues related to complexity. There is a general consensus that we need to really understand the extent and source of the risk we run with our suppliers, and we need to consider all divergent views while ‘questioning everything’ in order to that we can “untie” ourselves from the complexity and the “tyranny of tactics” so that we can focus on what is really important and strategic.

There’s also a clear alignment that we need to look at the end-to-end process – sourcing doesn’t just have to look upstream. The signing of the contract is the start of the process and everything has to be seen – up to managing the permanent relationship and the continuous continuity of supply and performance: this is everyone’s problem!

Remember that cost is only one outcome of the value discussion

Pierre made a few references to the results of the CPO study and pointed out that “agility” (and the ability to understand what agility really means) was a common thread. It is essential to enable a broader understanding of value (beyond cost savings), maintain relationships between ecosystems, reduce lead times, improve working capital, achieve better results and get things done faster. and on a large scale.

Michael says driving costs is not the primary and “North Star” focus for procurement. Cost is a result of value, and is certainly critical now in a very difficult market today, with crosswinds of inflation and supplier demands for price increases making cost avoidance a key issue. major subject.

Max agrees but emphasizes that setting up a system to measure this “value” is not easy. First, the challenge is how to define value and then understand how our stakeholders define value and what sourcing value brings to the whole organization. “The best we can do,” he says, “is make good assumptions that everyone can agree on.” It is therefore not surprising that the CPO study has shown that operational efficiency has overtaken cost reduction as a priority for the next 12 months as all functions strive to free themselves from legacy processes / technologies. and focus on the larger business.

Understand business goals

Speaking of the broader business, CSR and innovation have also made leaps up the CPO priority ladder.

Our two experts work in industries where innovation, CSR and risk / compliance are essential, and both agreed that the way for a CPO to please both the finance and the CEO is to make sure you fully understand the strategic objectives of the company, so that you can bring them to cross-functional stakeholders and accelerate them. For example, the CSR / ESG issue for the company is essential for customers and the brand, and sourcing actually supports this with diversity and inclusion, but also by making the sourcing base more diverse on multiple dimensions (especially for innovation).

To do this, you need to build a rich collaborative process and you need the visibility to plan at least three years in advance. Procurement is well positioned because it sees the complexity of all business units, finance, legal, IT, etc. And with his helicopter vision, he can not only align with stakeholders, but also coordinate with each other and bring a common face to suppliers.

The webinar experts delved into this issue and offered some tips on how to achieve it, especially regarding the topic of SRM, and why it is becoming an even more important topic for the CPO than ever before. SRM seems to be experiencing some sort of perfect storm, including vendor insight, vendor collaboration, vendor innovation / ecosystems, and, according to Michael, achieving value by being smarter together (adding the quip ” none of us are smarter than all of us ”) and leading to the conclusion that procurement must be a primary agent of value to harness this internal / external community intelligence.

Key points to remember to tackle risks and become a strategic advantage for your business

Webinar attendees provided a few takeaways:

  • Look downstream and upstream – procurement needs an end-to-end view
  • Risk, like the Suez disruption, will always happen, don’t sit back and wait for it to happen
  • Understand the strategic business objectives and understand the difference between sourcing strategy (guiding in-house sourcing) and strategic sourcing (helping improve business strategy by harnessing innovation in the sourcing market)
  • Use analytics – find out what your top metrics are for your business and use the power of the community to improve your data (it’s hard to do, but analytics can meet you where you are now)
  • Take the time to talk and understand your critical suppliers – invest empathy and development for better returns, such as innovation
  • Prioritize people, processes and technology – and at the same level of importance
  • Hire the right talent to support your goals – there is still room for everyone, but new necessary skills come into play

It was a deep and interesting discussion and it’s just a snapshot with our own take out. He filled the 60 minutes, so unfortunately there was no time for questions and answers. However, if you have any questions relating to the discussion, please submit them to:

[email protected] [email protected]

You will soon be able to listen to the full on-demand webinar – we’ll provide a link through our daily Afternoon Coffee news series.

Download the BSM report powered by the Coupa community to understand the “ Suite 16 ” KPIs that assess your digital transformation in the areas of procurement and finance to spend smarter.

And download the Deloitte Global 2021 survey of purchasing managers with results and guidance on using agility to understand and respond to CPO priorities.

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