As procurement organizations continue to evolve, success will increasingly depend on the ability to reinvent and adapt to rapidly changing and uncertain environments. Having both a stable foundation and a dynamic capability at the same time is critical. The Hackett Group has done extensive research on how world-class procurement organizations enable enterprise agility and drive greater business value—modernizing procurement to not only meet expectations, but surpass them.
Christopher Sawchuk, who leads Hacketts procurement practice will discuss:
-The attributes of agile enterprises and how agility drives success
-Why procurement executives’ priorities are shifting to quality of spend influence and supplier-led innovation
-How to leverage digital networks, master data management and analytics to enable this agility
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Agenda
• Introduction: 2015 in Review
• 2016 Key Issues: Agility in procurement
• Developing procurement’s culture and talent
• Building an agile information and technology architecture
• Enabling an agile service delivery model
• Closing Thoughts
• About Tradeshift
4. Christopher Sawchuk
Principal, Global Procurement Advisory Practice Leader
The Hackett Group
A PROCUREMENT LEADER’S GUIDE TO
ENABLING BUSINESS AGILITY
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The Business Commerce Platform
We provide our customers with solutions
to buy and sell goods and services.
Our extensible platform allows you to
tailor solutions to meet your company’s
needs.
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Our Solutions
Procurement
Buy everything you need from one place,
where any online purchase can be within
policy
Accounts Payable
Transact with all your suppliers for 100%
of your invoice volume
Supplier Management
All your supplier master data, compliance,
product information, risk and performance
in one place
Platform
Direct & Indirect Transactions
Collaborative & Agile
Open & free for suppliers
App Ecosystem
Financial Solutions
Dynamic Discounting, Supply Chain
Finance, Virtual Cards
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End-to-End Business Commerce Platform
Supply Chain
Collaboration
Build your
own apps
Financial
Solutions
Third Party
Apps
Procure-to-Pay
(Direct & Indirect)
Supplier
Management
Tradeshift Platform
(Transactions, Collaboration, Compliance, Insights)
Customer
ERP and
Legacy Apps
Suppliers
Tradeshift
Platform
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Example of Extensibility / Agility
Forecast
Collaboration
E-Logistics
Order
Collaboration
Supply Chain
Performance
Supply Chain
Collaboration
Build your
own apps
Financial
Solutions
Third Party
Apps
Procure-to-Pay
(Direct & Indirect)
Supplier
Management
Tradeshift Platform
(Transactions, Collaboration, Compliance, Insights)
Customer
ERP and
Legacy Apps
Suppliers
Tradeshift
Platform
Transition: need to add more rigor to how we talk about agility. Not just a buzz word. Need to weave it into the SDM. This is not totally new. All organizations have pockets of excellence.
UBER: disruptive innovation and customer as king.
The Digital imperative: in back office, this is all paperless env. P2P and the goals becoming 100% digital.
Insight Imperative: Market intelligence and we going to talk a little about that later.
I – Internet of Everything
How can sensors, location based services, RFID, etc. help to make our supply chains more agile? For example, we talked about supplier networks evolving into business networks to increase supply chain visibility. Investing in this area is a precursor to making that happen.
S – Social Media.
Can social media be used as a tool to detect supplier risk patterns? Can we use it to collaborate across procurement? For example, marketing teams use Salesforce Chatter today to shift through the social media noise and flag areas where there may be a quality or brand issue that needs to be addressed. Why not use the same technology to keep track of suppliers in procurement.
M – Mobility
Can we conduct the business of procurement on the move? This is not only about approving invoices and viewing order status. Agility leaders can slice and dice massive amounts of data on their tablets to make decision on the fly.
A- Analytics
What predictive modelling capabilities should we invest in? Agility leaders are investing in risk forecasting engines, supply chain network what if scenarios and truly automated spend analysis.
C – Cloud
What do we need to know about the risks of sourcing cloud technology? For example, how will you get your data back if you terminate the contract? Can the vendor use your data to aggregate and sell benchmarking services?
C – Cognitive Computing
How will this revolutionize spend analysis? Risk forecasting? For example, what if Watson could recognize leading indicators to major risk events to take early action?
DDSN gartner. Drive info, viz, decisions.
Talking points: pg 14 of Agility briefing book
Customer-centric value networks represent the synthesis of agile enterprises: information-driven decision-making, customer-centricity, digital value network and operational responsiveness
These networks express the evolution of the value-chain model to better reflect the nature of value creation and operating models
Formally linear value chains have become digitally integrated value networks, with interconnected internal and external resources and services providers, and networked consumers of goods and services, both digital and physical
Business services such as finance, human resources, information technology and procurement play a crucial role in value creation through their management of information, talent and performance, and provisioning of infrastructure
Location in a stable environment
The business process should reside in a functional area and set of platforms that are fairly stable from an enterprise applications perspective and not subject to the disruptions of a major new IT-driven, SOA-based development effort. A period of 12 to 18 months in which no major changes are anticipated is ideal
Need to access multiple systems
The process should normally require an employee to access multiple independent systems to complete it. This is attractive because such a process doesn’t present particular challenges to automation software vendor’s presentation-layer integration approach, which exploits the similarities of the presentation layer across different platforms. By contrast, automating such a process as would IT – using application- or data-layer integration – would typically be much more expensive, time-consuming, and in the case of the latter, more likely to break in the event of changes to any one of the component systems
Easy decomposition into unambiguous rules
The process should be one that business analysts and process modelers can decompose into a clearly defined set of business rules – a logical flow with no ambiguities as to decisions and required inputs and outputs for each step of the process
Limited need for human intervention
The process should have no gray areas that require the intervention of a human worker to make decisions based on analysis, judgment, perceptual, or interpretive skills, e.g., handwriting recognition
Limited need for exception handling
The process should have as few exception cases to handle as possible. The tool has sophisticated capabilities for rules-based exception handling, but the more exceptions the robot has to handle, the longer it will take to automate, test, and optimize. Simpler processes with fewer exceptions are especially preferable for the proof-of-concept and pilot phases
Clear understanding of the current manual costs
Automating the process should yield a projected benefit of at least 200% of the anticipated cost in 12 months or less – a common minimum standard for getting approval to go forward with the pilot of a new technology. To make this case, it helps to have a defensible breakdown of what it costs for your organization to deliver the business process by current in-house or offshore methods so you can clearly quantify the expected savings
High transaction volumes
High transaction volumes often will help the business case for automating a particular business process, but are not essential. Tasks that are high in value but low in transaction volume, or low in volume but still business-critical, can also be good candidates for automation. For example, automating the process of handling certain customer transactions on holidays to meet a service-level claim of 24/365 availability can eliminate human FTEs that would require expensive holiday pay. Also, low transaction volumes almost always weaken the business case for traditional IT software development to meet the requirement
Build this one out.
Could increase spend influence by 15% using an outsourcing provider to provide tactical buy desk support, e-catalog maintenance