See Inside the Strategic Sourcing Forum 2019 | Sievo

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See Inside the Strategic Sourcing Forum 2019

Lari Numminen

Head of Marketing

The procurement elite of  Finland gathered in the gilded Hotel Kämp ballroom in downtown Helsinki this morning. What brought us together was the first ever Strategic Sourcing Forum hosted by our partners Cloudia.

In his opening words, CEO of Cloudia Are Saarinen observed that “you don’t need a digital strategy, you need strategy in a digital world.” Going further, he advised that “technology should enable, and not be the end goal for any strategy,” and “to succeed, simplify processes as much as you can.”

Afterwards we heard from Antti Kojola from Gartner. While everyone had heard of Gartner, not a brave soul in the audience was brave enough to answer the question, “what does Gartner do?” In Antti’s words, their goal is to “look at the world and identify the good, the bad and the ugly.”

With a focus on the technological changes emerging in the next 5-10 years, three things stand out from Gartner’s world view.

3 Future Trends from Gartner

  1. Cost reduction has been the historical focus for procurement, but identifying and capturing supplier innovations is the fastest growing area of importance by 2025.
  2. Digitalization is an accepted strategic priority for 87% of senior business leaders, but up to 70% of employees report they don’t have mastery over the skills needed for their job. You’ll need technology and skilled people to achieve transformational change.
  3. Areas with transformational potential for procurement in the next 5-10 years are:
    • AI for Procurement
    • B2B Network Intelligence
    • Multienterprise Grid Functionality (ie. data and processes shared between businesses)
    • Smart Contracts

After Gartner we saw the fresh face of Ville Suvanto from CGI, talking about the transition from reporting to decision automation enabled by artificial intelligence.

A procurement leadership event wouldn’t be the same without some parting shots from Sievo. Our very own Anand Seshadri gave a CPO’s view on buying software.

Here are a whopping 10 things you can learn from listening to Anand for a short while.

10 Key Takes from the CPO

  1. Procurement is most often seen as a cost centre, which means it is often under resourced. Don’t expect more headcount going forward unless you unlock more value to business.
  2. Procurement is not a strategic role until you take ownership of all costs. Don’t talk to the CEO about OPEX/CAPEX if they are interested in bottom line impact within the fiscal year.
  3. While costs are important, executives are looking for competitive advantages. Talk to your CEO about ways to gain an edge over rivals.
  4. Be ready to talk about value to your company brand. For example, buying Apple devices over Samsung may be more costly, but can give your brand a halo effect.
  5. Full suite vs. best of breed is an endless discussion. Many CEOs will appreciate the predictability of full-suites, but many times the comprehensive offer doesn’t live up to promise. Be ready to leverage best-of-breed solutions if they serve your purpose.
  6. All spend that doesn’t follow process is maverick spend. Often the problems start from the top, for example, when a CEO insists on working with a particular consultancy without utilizing a competitive RFP process.
  7. Direct procurement is the sexy part and indirect procurement can get you fired. Indirect is where all the hanky panky arises, for example, when you try to make sense of unruly travel policies and procedures.
  8. Going forward, benchmarking is of critical importance. It’s not enough try and convince your leadership that you’ve secured good prices. You’ll need to prove to your CEO that your prices are better than your peer or market benchmarks.
  9. The issue for most procurement organizations is not your big suppliers. You’ll always have focus with these key relationships. On the other hand, challenges often arise in the long tail. That’s where you’ll need automation and software enabled efficiency.
  10. For innovative procurement organizations the future is full of possibility. Some creative strategies include investing in your suppliers business, risk sharing plans and multiparty agreements. If you believe in your suppliers, look beyond cost savings.

The 2019 Strategic Sourcing Forum concluded with sage advice from Maija Tanner from Cloudia. She encouraged participants to imagine a future where you automate some of your core functions, such as procure to pay with no human intervention. Technology can enable your brave vision, but the change needs to come from people and their skills.

If you like what you saw, stay tuned for the next Strategic Sourcing Forum and follow Cloudia on LinkedIn and Twitter.

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