Collaboration is a Key Competitive Advantage

RP_Group_blueIn the 20th century, the key to business strategy was the linear value chain. The goal was to maximize bargaining power with buyers and suppliers, while at the same time minimizing threats from new market entrants and substitute goods. A strategy was like a game of chess and you had to maneuver all the right pieces in all the right places.

Today, that linear world has broken down and we operate in a semantic economy where everything connects. It no longer matters what resources you control, but what you can access and many of the best assets lie outside your organization. Firms that can collaborate win. What is collaboration all about?

SOCIAL ECONOMY
Today, that linear world has broken down and we operate in a semantic economy where everything connects. It no longer matters what resources you control, but what you can access and many of the best assets lie outside your organization. When everything is connected, closing yourself off means that you are more likely to lose access to valuable resources than you are to protect anything that can’t be duplicated elsewhere. That’s why now we need to use platforms to access ecosystems of talent, technology, and information. Nobody can go it alone anymore. Strategy in a networked world can no longer focus solely on efficiency.

Today many large companies see themselves as essentially utility companies, providing fundamental technology and letting smaller firms and startups explore new business models. Innovation has come to be seen as largely a matter of agility and adaptation. Small, nimble players can adapt to changing conditions much faster than industry giants. That gives them an advantage over large, bureaucratic firms in bringing new technologies and other products to market.

That’s why today’s economy is a social economy with collaboration at its center. In the past, we could dominate by accumulating resources and driving efficiency, but now agility and interoperability that rule the day. We need to shift our focus from assets and capabilities to trust, design and networked organizations.

SUCCESFUL COLLABORATION
Collaboration isn’t simply about “being nice to each other”. Effective collaboration, whether between individuals or whole businesses, is about strong, robust relationships where partners can scrutinize each other and deal with conflicts constructively in an environment based on trust.

Wikipedia says: “A Collaboration is a purposeful relationship in which all parties strategically choose to cooperate in order to achieve shared or overlapping objectives.”

Herminia Ibarra says: Collaboration is a way of working that attracts and involves people outside one’s formal control, organization, and expertise to accomplish common goals. Understanding what collaboration is not is a crucial part of getting better at it.

At Collaboration Growers we have developed the Collaboration Wheel. It is a 6 step process which guides you in terms of setting up your collaboration platform. If you would like to know more about the Collaboration Wheel you can check out this blogpost. The process has 6 steps:

  • Define the need and create awareness
  • Build the guiding governance
  • Build the collaboration platform
  • Define the customer collaborative activities
  • Get moving: Seek, assess, validate and engage
  • Stay on top of things: Manage and exit

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

 

The Collaboration Wheel – Your Tool for Successful Collaborations

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In a time of rapid change the ability to innovate and change quickly and effectively, again and again, is perhaps the only enduring competitive advantage. Those firms that can innovate and change constantly will thrive. Those that do not or cannot be left behind. This demands that companies seek outside their own ecosystem for ideas and execution in timely speed. Companies need to collaborate.How could a structured approach look like in the entire lifecycle of the relationship? 

We have developed the Collaboration Wheel, a tool which can help you create successful collaborations.

1. DEFINING THE NEED AND CREATING AWARENESS
As a company you need to be able to explain why you are looking for inspiration outside your own ecoinnovation system and most importantly how should it benefit your company? It is important that the open approach is anchored in your company´s strategy. It is also important that your leaders have a collaborative mindset. Check out this blogpost on Collaborative Leadership skills. Keywords:

  • Alignment with your company´s strategic objectives
  • Objective with your company´s Collaboration or Open Innovation Manifesto
  • Collaborative Leadership approach

2. GUIDING GOVERNANCE
The governance structure behind your approach is your backbone. The question is what type of collaboration culture you would like your employees to work by. What are their current skills and how much trust are they capable of and willing to put into the relationship? From an idea is generated to the idea is implemented – what are the roles and responsibilitues in that proces – and what happens in the relation if it does not get implemented. Keywords:

  • Creating a collaborative culture
  • Assessing people collaborative skills
  • Assessing the company´s collaboration maturity
  • Trustometer – Ecosystem trust
  • Stakeholder management
  • Decision making process
  • Roles and Responsibilities
  • Intellectual property Management

3. COLLABORATION PLATFORM (PEOPLE WITH PEOPLE)
Now that your backbone is in place and anchored in the strategy it is time to engage the people that are part of the process. What sort of tools and processes are you going to utilize for knowledge exploration, retention and exploitation? Keywords:

  • Knowledge exploration
  • Knowledge retention
  • Knowledge exploitation

4. CUSTOMER COLLABORATIVE ACTIVITIES
How is that your partners should be involved in your ecosystem, what sort of information are you going to share with them and how will you assist them? Keywords:

  • Ecosystem involvement
  • Customer communication
  • Customer assistance

5. GET MOVING
You have the system in place. Now it is time to seek out the ecosystem partners, assess their willingness and validate their capabilities. Keywords:

  • Seek ideas and ecosystem partners
  • Assess willingness
  • Validate ecosystem partner capabilities
  • Engage, collaborate and build trust

6. STAY ON TOP OF THINGS
It takes trust to manage a relationship. Do you have the knowledge about what triggers trust and how to use it effectively in your relationship?
If the relationship is not benefitting the company and the strategic direction it is time to say goodbye. How is the process and what triggers it? Keywords:

  • Manage relationship and maintain trust
  • Exit strategy, triggers and process

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

There is more to Procurement than Savings

 

RP_waste_healthProcurement is a fairly new discipline. Having started in the mid 80’s where “the Chinese” made prices go down and Procurement had their glory because Procurement savings were a safe bet – we now have a new situation. What is the role of Procurement going forward?

THE NEW REALITY
After multiple rounds of cost reductions, customers and suppliers find themselves in a different world. Demographics in China have become unfavorable, and the cost of Chinese labor has more than quadrupled over the past 15 years. Growth rates are slowing or stagnating around the world, and politicians in Europe and the United States are promising to roll back globalization.

In this new reality, it is difficult to have much leverage over suppliers and pushing them further would mean that you would have to compromise on product quality, delivery reliability, or working conditions.

Procurement must create value in new ways and strategic innovation could be a helpful tool. In this blog post I am discussing ways in which you can start building your new value proposition as a CPO.

WHAT IS INNOVATION?

No matter whether you work in Procurement or anywhere else in the organization we are all dependent on our ability to bring in new radical ideas to the business. Not just the incremental ones but true radical ideas. We need to encourage to examine established beliefs, facilitate innovative solutions, and even challenge what is core. How can this be done in a structured way?What is innovation? This discussion is very important to have not only on an executive level but also with your employees. Quite often employees will think that innovation is something which is all about developing new products. It is much more than that. Frame the way you want to change the world. Start with defining and publishing innovation goals at the company level, and then ask teams for a breakdown into incremental, sustaining, and disruptive innovations.

This discussion is very important to have not only on an executive level but also with your employees. Quite often employees will think that innovation is something which is all about developing new products. It is much more than that. Frame the way you want to change the world. Start with defining and publishing innovation goals at the company level, and then ask teams for a breakdown into incremental, sustaining, and disruptive innovations.

INNOVATION IS MORE THAN PRODUCT DEVELOPMENT
Encourage your employees to think about innovation from different domains – it could be the 4 P’s: profit models, processes, products, and policies. By highlighting the different arenas in which employees can be involved with innovation, companies can help employees add value in areas where they have deep knowledge and a desire to get involved. Tools which could support you here is an innovation intent. If your company does not have an innovation intent – get inspired by the innovation intent which Grundfos has created right here. If your company has an innovation intent – describe to your employees how you expect them to translate that in procurement. By highlighting the different arenas in which employees can be involved with innovation, companies can help employees add value in areas where they have deep knowledge and a desire to get involved.

If your company has an innovation intent – describe to your employees how you expect them to translate that in procurement. By highlighting the different arenas in which employees can be involved with innovation, companies can help employees add value in areas where they have deep knowledge and a desire to get involved.

FIND YOUR CHAMPIONS AND DEVELOP YOUR INNOVATION CULTURE
Big businesses have large employee bases with clear reporting lines.  While this structure provides a number of benefits, it can also be a roadblock when it comes to creating a culture of innovation.  While a company may preach the benefits of innovation, middle managers are still tasked with ensuring optimal performance in the business’s core activities.  They have little desire or capacity to jeopardize core initiatives for unproven innovation efforts. Innovation champions can help employees find friendly spaces to test their new ideas, while also providing a level of protection against managers who are charged with focusing on the core.

NEW METRICS & FRAMEWORK
New initiatives can’t compete at the same level, and they are killed off before they’re given a chance to prove themselves.  Performance metrics often suffer from the same problem.  While employees are told to be innovative, their performance goals and compensation packages don’t create the incentives to do so.  Even the best ideas aren’t going to get any traction if the value they bring to the organization isn’t made clear.  And that’s often where companies fall short.  I recommend that you invest in innovation programs to bring in new ideas. You should give individuals the tools or frameworks to show why those ideas which have been generated are worthwhile. So instead of teaching employees how to come up with new ideas, you should rather teach them what to do with the good ideas they come up with, from knowing who should hear the idea to what that person should be hearing.

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

Is Procurement Getting Disrupted?

 

A lot of business stories show that simply managing well, developing quality products and building up well recognized brands is insufficient to remain in the top. “Disruption” is the buzzword used. It will probably be the business word of the year as it is on everybody’s lips.

The key question is why Procurement should take disruption seriously in order not to get “disrupted” and how Procurement executives should act.

What is disruption?
Clayton M. Christensen describes disruption as:

“A process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others”.

Translated – it is all about the fact that there is a new logic in strategy. Typically companies define their most important competitors as other companies within the same industry, meaning companies offering products that are a close substitute for one another. What is happening is, that in more and more market’s we will see industries competing with other industries and entirely new categories. By that I am not saying that the industry is irrelevant, I am just saying that using industry as a level of analysis is not enough any longer. Also, the competitive advantages once achieved might no longer be an advantage as they can be copied quickly, challenged by new technologies or challenged by customers seeking other alternatives.

Should Procurement take disruption seriously?
I would rather ask the question – what will happen if Procurement will not take disruption seriously. Typically when a company has achieved a solid position within an industry the company is encouraged to optimize their people, assets and systems around these advantages. The issue is though, that since these advantages are not sustainable it might not make any sense. Instead companies should focus on leveraging ephemeral things such as deep customer relationships and the ability to design irreplaceable experiences across multiple arenas. Where is the role of Procurement if it is not in optimization, that is the big question in the light of the new logic in strategy.

High potential for Procurement
Procurement still has a vital role to play. To win in these volatile and uncertain environments executives (from all over the company) need to learn how to “exploit short-lived opportunities with speed and decisiveness” (Rita McGrath; The end of Competitive Advantage, Preface). Collaboration with all types of partners, and their willingness and ability to share their knowledge, will be crucial and key to a successful development and execution of new disruptive concepts. Bearing that in mind, Procurement has an opportunity to facilitate that supply partnerships emerge from a pure cost orientation towards a strong focus on joint collaboration and innovations. For Procurement to be successful in these innovation oriented supply partnerships I believe, that it requires new models for relationship building and collaboration. It also requires procurement to integrate across the whole organization.

In many companies it is typically a challenge to include suppliers in the front end of the innovation process. Procurement teams are often disconnected from the functions they serve and the markets they engage with. They are not fluent in the nuances of the business and hence lack experience and authority. Also in many companies, Procurement are used to “innovation” being an internal capability and are hence not used to working together with external partners on delivering innovation.

How do executives act?
Summing up all of the above has significant implications for how Procurement professionals are trained, developed and deployed in future organizations. You might not know what kind of people you will need. That is why Procurement executives should hire for the ability to acquire new skills (learnability) and not for existing skills. As a Procurement executive I believe you will be measured on your ability to move from advantage to advantage and prepare for the needs that lies ahead.

To do that you will need a flexible learning environment. Take a close look at the Procurement Academy. A flexible solution where you can train your staff to what is required for their role, and in line with your business challenges and strategy.

Release the (supplier) innovation potential through visions

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In all companies there is a great potential hidden in the whole innovation eco-system. The possibility to create extra value in the early stages of the value chain, where solutions are developed, are inexhaustible. To my opinion it is almost only the fantasy that sets the limits for what can be achieved.

I believe that one thing where a lot of organizations can improve is by setting common visions as a strategic tool. These should be valid not only for the development organization, but also for all other parts of the organization.

Including Procurement.

Think about it in your own organization. If you took a step back and looked at your own achievements. I am sure you could come up with some suggestions to how you could improve your approach and create more innovation possibilities. This is the easy part. The hard part is to actually execute on it. Lot’s of organizations have made improvements in the development organization. The leadership team have made improvements in terms of leadership competences. People with “knowledge to innovate” have improved their professional skills. The challenge is often to make these competences work in one common direction. Quite often I find, that professional competences (expertise) and individual goals fill up the space, compared to the company’s goals and the common goal and the ability to integrate.

In order to get maximum innovation value it is necessary to have one vision. A vision which is actually value driven. Perhaps even KPI driven. It should be focused around the customer and the value that can be created for the customer. It has to be the vision, the dream you could say that everyone should work towards.

When talking about supplier innovation it is important to integrate the supplier into the process by communicating the company vision to them as well. By loading them with knowledge about customer expectations. Imagine a customer-supplier relationship where they are motivated to take even more responsibility for innovation and for driving radical change? This could potentially be a game changer for your company. Though, the common vision is key for not only the whole organization, but also for your suppliers.

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform. 

 

Can Procurement help redesign capitalism?

RP_Responsible_Procurement_ManagementSometimes I can not stop thinking whether there is a limit to how much economic growth the world can support. Are we too cautious in our approach and should we be much more proactive? Could Procurement play a much greater role in actually redesigning capitalism?

I feel inspired by the founder of the Institute for Leadership and Sustainability, professor Jem Bendell who says:

“One opportunity for the new generation of leaders is an awakening. Everywhere I turn, I’m hearing people asking “how long can it go on?” Financial and ecological crises are leading people to sense the need for a transformation of economic systems. In the past years working on sustainable development I’ve seen positive initiatives, products or services, but they remain marginal. Social innovations can no longer be the side show to systemic decay. Its time to team up for massive change, and take positive innovations from the margin to the mainstream. For that we need leaders who are adept at learning from the edge, because those ideas that seem strange to you today may hold the solutions for tomorrow.

In a sense, the challenge of this generation of leaders is the same as any, to transcend the mental barriers we are brought up with, between us and them, us and nature, my generation and yours, my specialism and yours, my faith and yours. These barriers are inventions, yet we maintain them due to our egos, and fears, and our need to belong to one particular group. In an interdependent world we now need globally responsible leaders: not just leaders serving their own, but conscious of the world, and how they affect it. I’m not talking about leaders from the West, but leaders from the rest of the world, caring about all of the world.”

The same applies to Procurement professionals – and leaders. There is a strong need to provide these leaders and business professionals with insights and help them develop appropriate strategies. Create a new form of capitalism. They should be careful not to be too cautious in their analysis and too narrow in what ideas they draw upon. They have to uncover the hidden assumptions in order to develop new insights into the strategic implications of our current crisis. It takes a strong leader and a willingness to take the risk. There is no plan B – so what’s to loose out on?

Collaboration Growers help companies move to more open forms of innovation and collaboration with external partners. We do that by mobilizing capabilities and resources for mutual benefits by building more trust. Get inspired for more on the Collaboration Growers platform.

 

Why care about water as a procurement professional?

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Water resources are under increasing stress, with water management now recognized as one of the key societal, environmental and sustainability challenges of the 21st century. The stakes are high, and solutions aren’t simple. They require a deep understanding of the causes of water risk and a willingness to think beyond the normal.

WHAT’S AT STAKE?

Water scarcity will not only affect humans but also freshwater systems and species. According to the WWF:

  • 41% of the worlds human population lives in areas of severe water stress
  • 800 million people lack access to safe drinking water
  • 2,6 billion people lack adequate sanitation services
  • Water pollution is high, especially in developing countries where up to 70% of industrial waste is disposed without treatment
  • The world’s population is expected to peak at 9 billion by 2050. Already in 2025, 65% of the worlds population and 1/3 of the land area will be in severe water stress due to additional food and water requirements. Most of the 3 billion additional people will live in cities in the developing world with poor water sanitation infrastructure. Increasing water scarcity leads to increased potential for conflicts.
  • Temperature increase of 1-2 degrees by 2050. Climate change results in higher weather variability, less freshwater stored in ice, more droughts and floods, and changes in the ecosystem due to higher water temperatures.

WE ARE ALL IN THIS TOGETHER
It might sound like a cliché. Though, at the end of the day we are all in this together. The entire world is a stakeholder on the water issue. Less than one percent of the earth’s water is fresh water, and of that, only a percentage is not frozen and readily available for usage.

We, the people of this planet, are currently using 50 percent of the fresh water available annually, which is more than what the earth is able to restore within a year. The availability of fresh water compared to the demand of fresh water is putting extreme pressure on this resource.  The UN has estimated that anywhere from 2.7 billion to 3.2 billion people will live in water-scarce regions by 2025.

USE LESS WATER
All industries use water, some more than others, and as water becomes less available, and therefore more expensive, it will be in all business’s interest to use less water. In fact, many large corporations have shown great interest in the water issue already, not because of an inherent belief in helping to save the environment, but rather as a means to help save their businesses. This important, and historically overlooked, operational risk and associated costs are expected to rise exponentially in the coming years. Corporate, NGO´s and government must come together to attack water subsidies.

USE THE WATER RISK FILTER
Water, or the lack of it can directly affect companies profitability. In the worst cases, poorwater management can force closure or relocation of business operations. According to the WWF, when it comes to dealing with water issues, many companies don’t know where to start. The WWF has developed the water risk filter. It assesses water related risks. View it here.

About the author: 
Alis Sindbjerg Hemmingsen is a thought leader within the field of Responsible Procurement. Her unique capability of combining sustainability and procurement best practices has positioned her as #210 on the global Responsible Sourcing ranking, listing the most influential contributors to the Responsible Procurement field.

Her mission is to inspire companies and people around the world to develop impact driven approaches to Responsible Procurement. This should accelerate the sustainable change with their suppliers and create a sustainable future for the generations to come. More than a 1000 people from 30 different countries have already downloaded her e-books and tools from the website of Responsible Procurement Excellence. Besides her thought leadership she works full time in Velux procurement (as of march 1st 2015). Views are her own.

 

Taking The Stage With Sustainable Procurement In 2015

I have written this post together with and for Ecovadis. First published here.
The Intergovernmental Panel on Climate Change reported that the risks of climate change are so profound that they could result in food shortages, plant and animal extinctions, and other dangers if greenhouse gas emissions aren’t curbed by 2050. They said this in a very stark language.
The challenge is that our economies motivate people and businesses to consume to such a degree that the planet is unable to regenerate itself.However, we have the opportunity to re-think the way we do business.The question is: how does that affect procurement in 2015 and onward?
PROCUREMENT ADDRESSES A SOPHISTICATED AGENDA
In order to understand the future, we need to understand the history. First of all, driving out costs has often meant driving risk in. The last 30 years has reshaped business models and the business landscape. Globalization coupled with rapid developments in the new information technologies are changing the way we work and live.This evolution of supply side management has placed procurement at the strategic heart of many organisations. The procurement function must address an increasingly sophisticated agenda in meeting the needs and demands of modern business.
The procurement function must add something which is value adding to the business.To deliver this new value creation imperative and meet the needs of business today implies a different role and set of responsibilities. They will have access to smarter systems and increase responsiveness. This will automate many processes, and reduce some needs for human intervention, but accentuating the need for those interventions to be creative, strategic and well-informed.
It will require that procurement leaders become bimodal, analytical, strategic thinkers, collaborators and orchestrators who optimise complex networks of global capabilities. Procurement will from their position be they who will have the mandate, and the ability to enable a delivery to the business.According to the white paper published by Optimum Procurement “The Dawn of Procurement’s New Value Proposition”, procurement faces the following challenges, to be:
INNOVATIVE

  • Increasing complexity demands greater focus and creativity
  • Technical competency will be increasingly complemented by soft skills
  • Procurement will become the attractor of innovation
  • Category managers will be entrepreneurial, commercial and leadership focused

FOCUSED

  • Procurement will become more aligned to strategic business goals
  • Supply management decisions will be much more rigorously validated
  • Increased analytics and modeling will help improve evaluation
  • Previously unattainable levels of analysis will be achievable in addressing a dynamic set of risks and constraints

COLLABORATIVE

  • Procurement professionals will need to be internal and external networkers
  • They will need to integrate across the whole organization
  • Job rotation will become an essential learning tool for them
  • They will be strong team players capable of overcoming functional, national and virtual boundaries

Circular Procurement
Now that we have touched upon the overall agenda affecting procurement it’s also important to address tendencies which is affecting the Sustainable Procurement agenda.

Many of the world’s natural resources are threatened, some are less obvious than others. Hence companies have to adapt to the fluctuations in commodity and energy prices. Companies, which rely on the availability of plentiful and inexpensive natural resources, are living on borrowed time. Our economies have up until now used a “take-make-consume and dispose” pattern of growth – a linear model, which assumes that resources are abundant, available and cheap to dispose of.

A circular economy, and in Circular Procurement takes into consideration that valuable materials are leaking from our economies. Our society can benefit economically and environmentally from making better use of those resources and hence, applying circular principles. Circular Procurement could be the answer to one of the worlds biggest challenges.

GOING BEYOND COMPLIANCE
Another trend is that sustainability is becoming an even more core part of a company’s core way of doing business. Procurement is playing a vital role in that transition, as they have to contribute to secure continuous access to resources and strengthen the company’s reputation and competitiveness. This means going beyond compliance.

Going beyond compliance means creating real changes within the environmental, social and economic agenda – which has a bottom line impact. It’s not just about following mainstream by developing a code of conduct or sending out a supplier survey. It’s about thinking: how can my business reach new markets, innovate new solutions or accelerate growth grow from a Sustainable Procurement approach?

If you work in procurement 2015 will be the year where you focus on becoming bi-modal, analytical, strategic thinkers, collaborators and orchestrators who optimize complex networks of global capabilities. Think Circular (Economy) and go beyond compliance management – then you will be able to take the stage in 2015.

Author: Alis Sindbjerg Hemmingsen
First published in the Sustainable Supply Views blog from EcoVadis
EcoVadis is the CSR rating platform for supply chains spanning 150 sectors and 99 countries of Global-500 enterprises like Verizon, Coca Cola Enterprises, Johnson & Johnson and 100 others.  EcoVadis Scorecards make it easy to understand, track and improve suppliers’ environmental, social and ethical performance. www.ecovadis.com 

4 Ways Sustainability Experience and Skills Can Boost Procurement Careers

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I have written this blogpost for and with Ecovadis. First published on the Sustainable Supply Views blog.

Increased competition, higher customer expectations and shifting attitudes and awareness towards the environment and sustainability are a few of the pressures impacting the ever-changing world of procurement. Expected lifetime of a product is becoming ever shorter. Additionally supply chains are growing longer and are getting more complex. Companies have new exposures in new geographic regions, and the interconnected nature of the global economy makes problems more, not less, likely to arise. The likelihood of supply chain disruptions or brand-impacting events has increased, as well as their potential visibility in our hyper-connected world.

Procurement professionals who have taken on tasks or a role in Sustainable Procurement and CSR in the supply chain are gaining valuable skills to grapple with these challenges. For successful implementation of sustainable procurement, professionals must learn and use skills such as an entrepreneurial approach, a collaborative mind-set and a business-driven strategic view.

How can procurement professionals benefit further from these skills in their career?

Collaborative Mindset
Procurement will have to work in a much more cross-functional role. Most procurement pro’s agree that without the alignment and symbiosis of other departments, procurement has little power. Strong team playing skills as well as strong internal and external networking skills are key competences.

Having said that, if a procurement professional possesses these collaboration skills, then they have a great opportunity to apply them in a business development role.

As Gerard Chick, Chief Knowledge Officer and Optimum Procurement says:
“Procurement must be the function that is continually challenging ways of working. Looking to ensure it help its internal business stakeholders achieve their goals and targets whilst, at the same time, taking the opportunity to challenge total cost, facilitate customer of choice benefits such as access to innovation and of course the management of risk. Most critical of all is, that procurement must be aligned to the corporate focus addressing the key question for any business: What it the value for the customer?” Check out the article here.

Entrepreneurial, With a Life-Cycle View
The entrepreneurial mindset is key when it comes to developing new partnerships and new products. It is also key in relation to the existing products, which could be challenged by good product stewardship. Good product stewardship practically means that you use a life-cycle approach. Using a life-cycle approach will help visualize the hot spots in the products, help develop product design scenarios and support the organization in engaging and collaborating with key stakeholders, to ensure improvements are implemented.

Taking a life-cycle view means finding the “innovation sweet-spot” where consumer needs, environmental impact and technical and business capabilities converge. Taking a lifecycle view also ensures, that improvements made in design actually do translate into measurable improvements in environmental performance.

Once you have experience with a responsible procurement project, you bring valuable examples and perspective on all these aspects to every new project and product team you work on within your career. Good entrepreneurial skills are also a good sign of a person’s ability to adapt to changes and typically something which is highly sought after with new potential employers.

Business-Driven Relationship Development
In the past, if you asked a procurement professional where innovation happens they would typically answer: in other parts of the organization. They are not used to innovation happening outside the company, for example in their supply chain, and with the supplier. The changing business environment demands a much faster development pace, so supplier innovation is key to success. Procurement professionals have a key role to play as supplier coach and communicator.

For a deeper dive into these skills, check out this series of blogposts on the 14 skills of the modern procurement professional from CPO rising.

In many companies, and procurement functions, it is typically a challenge to include suppliers in the front end of the innovation process. Procurement teams are often disconnected from the functions they serve and the markets they engage with. They are not fluent in the nuances of the business and hence lack experience and authority. A good business understanding can lead to many exciting roles within or outside the company.

CPOs Seeking To Reap The Benefits
Looking backward, cost reduction was often considered the number-one priority in the eyes of the CPO. The new commercially-focused demands are rocking this traditional area of procurement strength. Globalisation has proven to be more about revenue growth than cost savings. Spend management is shrinking and the focus is now on sustained profitability.

That is why now CPOs are seeking to hire and promote those professionals with skills like strategic thinking, a business driven collaborative mind-set and an entrepreneurial total-cost-of- ownership approach. These skills are essential if you want to work in Sustainable Procurement. So even though CSR and Sustainable Procurement might not be the number one priority within your company, it is a great proxy for those skills.

EcoVadis is the CSR rating platform for supply chains spanning 150 sectors and 99 countries of Global-500 enterprises like Verizon, Coca Cola Enterprises, Johnson & Johnson and 100 others. EcoVadis Scorecards make it easy to understand, track and improve suppliers’ environmental, social and ethical performance. www.ecovadis.com

Why is Ethical Procurement also Responsible Procurement?

I have been asked the question of whether ethical procurement is also responsible procurement. To me the answer is a clear: YES! In this blogpost I will explain why and give you some ideas to what ethical procurement is.

WHAT DOES YOUR FOOTPRINT LOOK LIKE?
In order to understand what ethical procurement is all about it is essential to understand what responsible procurement is.

The typical challenge for procurement professionals is to understand the impact procurement decisions have on local communities, workers, and the environment, and then take action to ensure a positive impact. Kind of like asking the question: Where did and do you put your foot and what does the footprint look like? At the end of the day, that’s what Responsible Procurement is all about. If you plan well, it can promote sustainability, provide you with cost savings, and protect and enhance your brand. It’s as simple as that.

Responsible Procurement is a new dimension for many procurement organizations. Typically they have based their decisions upon price, quality, and delivery time. Responsible Procurement means taking into account the economical, environmental, and social impact of purchasing choices.

Practically speaking, Responsible Procurement is about defining a set of mutually compatible requirements, specifications, and criteria that favor protection of the environment, social progress, and economic development. You do this by identifying resource efficiency, improving the quality of products and ultimately by optimizing costs.

BALANCING THE 3 PILLARS
Responsible Procurement is about balancing what is called the three pillars: social, economic and environmental. So why is there a need to balance these three pillars?

From an environmental point of view, we have to ensure that natural resources that are extracted and processed into goods and services are consumed in a more efficient way – getting more out of less. And by changing the way we produce and consume, we can still limit the impact that climate change is bringing about. From an economic and social perspective, we have to ensure basic human rights and economic development, regardless of age, gender, nationality, religious belief or economic status.

ETHICAL PROCUREMENT
To me ethical procurement is a combination of the two pillars: social and economic. As an example – if procurement professionals for instance accept bribery or corruption – then they do not treat their suppliers fairly. They prevent unhealthy economic development and put up barriers to trade. At the end of the day it does not create a transparent company either.

From a social perspective I think it is essential to consider how procurement professionals should act on behalf of the company in terms of recognizing equality and diversity, observing core labor standards, ensuring fair working conditions, and increasing employment and skills. To support them in doing that I believe guiding documents or policies is a great way to show your stand.

One of the companies which I think you can learn from in terms of policies is Tesco. Check them out here. Do especially check their Code of Business Conduct. Great inspiration to how you can define your expectations towards your procurement professionals.

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TestResponsible Procurement Excellence has specialized in helping companies around the world develop and integrate an actionable approach to Responsible Procurement. An actionable approach goes beyond compliance, has a positive effect on the reputation, raises efficiency and generates revenue.  Sign up for the newsletter right here.

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