Wednesday, 16 August 2017

Modern Slavery - It's time to Act

In June, I attended the CIPS Gloucester branch event on Modern Slavery, which was presented by the hugely enlightening Andrew Wallis, OBE & CEO of Unseen. Unseen is a charity with the aim of working towards a world without slavery. It was shocking to learn how rife modern slavery is, even in the UK, with an estimated 21 million people worldwide the victims of forced labour.


As of April 2016, organisations with a turnover of £36 million with business conducted in the UK were required to report annually on the measures they have introduced to ensure there is no modern slavery taking place in their supply chain. Organisations are required to publish a Modern Slavery Act for each financial year, and it’s recommended to be published within 6 months of the organisations financial year.

If you’re in an organisation whose financial year ends in March/April, time is quickly running out to publish this year's Act.

Procurement professionals are at the forefront in the fight against Modern Slavery. With responsibility and visibility over the supply chain, and critically, what due diligence is done and the business systems to manage the risk. Market Dojo’s Supplier Information Management system (SIM) tool, SIM Dojo can quickly and easy help procurement teams to establish the processes and policies to help detect and identify potential risks concerning Modern Slavery.

Image result for modern slavery

Whilst is it almost impossible for an organisation to audit and monitor every supplier within a supply chain, it is even harder to manage and track this information through Excel or an equivalent. Using SIM Dojo, you can quickly capture details from your entire supply chain on what steps they have taken regarding the Modern Slavery Act, as well as allowing them to upload a copy of their Act. Another huge benefit of the system is the ability to set automatic reminders to notify your entire supply chain to provide an update on the additional measures they have taken to address Modern Slavery since last year.

SIM Dojo is an affordable, quick to implement system to ensure that the necessary due diligence can be performed on your supply chain. Please don’t let the use of ill-equipped tools or costs be a reason for not implementing a suitable Modern Slavery Act policy. We can even provide you with a questionnaire template for the Modern Slavery Act to enable you to hit the ground running.

This article was originally published on Pulse which can be found here, alternatively, discover more on the implications of the Modern Slavery Act.

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Friday, 11 August 2017

The Leaky Bucket of Business

If you ask most honest companies they will probably tell you that organisations value revenue growth and sales departments more than savings and the procurement/purchasing. Procurement is seen as an administrative function responding to the needs and demands of other areas of the business. But shouldn’t procurement be more prominent?
Why?  First, let me go back to the basics of the value of cost reduction

Every Pound or Euro that you save through cost reduction is potentially much more valuable than sales because every sale is reduced by the costs. Those costs might be the materials costs, overheads or even the cost of the sales process (after all someone has to pay the sales guys their big bonuses!).

Remember, what remains after the sale is the net profit. For example, if you’re selling TV’s for £100 each and you have a 10% net profit margin, each television sold will produce £10 net profit for the company. 

However, if you reduce the costs of producing the television by £50 per unit, then you will be making a £60 net profit on each television sold (£50 cost reduction + £10 initial profit margin). Meaning that without that cost reduction, in simplistic terms, your sales team will have to sell 6 times as many TV’s to get the same net profit.

The important aspect to consider is that the smaller your net profit margin, the greater the impact of cost reduction becomes. 

But how does this relate to ‘The Leaky Bucket of Business’?

Consider your businesses sales process as a bucket.  For every cost and expense, a different leak or hole appears within that bucket. The greater the costs, the more holes or leaks that you have in your bucket and therefore the less you will retain after filling up your bucket.

If your company decides to make a huge outlay on marketing, advertising and sales to increase the number of sales (in this case the level to which the bucket is filled to) you will still only be retaining what is left in your bucket.

Traditionally, departments other than sales and marketing have been marked out as ‘cost centers’; areas where cuts and internal savings can first be made, improvements should be limited to bounded capex and any additional pound of ongoing spend is a pound off the bottom line. This approach can work however it typically fails to recognise the value of internal investment. Wise opex focussed on improvements to processes and tools can pay dividends far greater than the investment. That might be in efficiency and speed improvements internally, i.e. ‘getting a bigger bucket’ or, our speciality at Market Dojo, reduction in external costs.

Every department is a profit centre if given the opportunity to be, and procurement is an oft-undervalued way to increase the profit margin without fighting for that next big sale. If your company decides to invest in procurement to reduce their costs and plug some of the leaks in your bucket, your company could be making more with less cost. 

The average statistic to measure a procurement department is that it should return 8-12 times in savings to what it costs. If your procurement department isn’t performing to this level, it’s time to look hard, not at cutting their staff, but at improving their processes and tools in order to make the most of your ongoing spend.

Thus why it’s important to invest in your procurement team and their tools, ensuring that you’re not sacrificing sweat, tears and blood for the sake of a very leaky bucket and why (controversially) Procurement has more value than Sales.

For more information on how Market Dojo can help procurement professionals save time and money, get in touch or register for free with our range of on-demand eSourcing tools and find out for yourself!

Tuesday, 8 August 2017

Introducing the LAVERGNE PROCUREMENT MATRIX

We recently encountered an article on Linkedin by Rémy de Lavergne, a highly experienced procurement professional with a specialism in Logistics. Rémy had clearly put some thought into what made a ‘good’ buyer and went a step further by categorising them by key attributes. 

We couldn’t resist having a call with Rémy to understand this further, which led to this introductory article on our blog.  We’ll follow up with more of Rémy’s insight in due course, but here is an introduction to his Procurement Matrix.


“Procurement is the process of finding, agreeing terms and acquiring goods, services or works from an external source, often via a tendering or competitive bidding process. The process is used to ensure the buyer receives goods, services or works at the best possible price, when aspects such as quality, quantity, time, and location are compared." - Wikipedia 

This definition is clear but it is not enough for me and probably neither for you?

I have been Purchasing for 20 years now (in different countries and industries) and I have often read and heard very interesting things about Procurement issues, but not enough to give me a global picture about what are the objectives and the best practices.

So I have started to brainstorm and have tried to create a one page Powerpoint puzzle about Procurement with 2 questions in mind:

- What does buying mean?
- What is a good buyer?

After selecting and analyzing more than 35 key words (SRB, Networker, Communicator, Excel…), I found a clear and simple definition :

A Buyer is both a Value Marker for Clients and a Cost Reducer, at the same time.

And by analysing what buyers contributions are to these 2 objectives it became clear to me that we have been seeing 4 generations of buyers:


1. The Bureaucrat who manages supply but creates no value for clients nor cost -reduction for the organisation.
2. The Cost Killer who reduce costs but without taking care of value creation for the clients.
3. The Innovator who values innovation but without trying to reduce costs.
4. The Business Developer who values innovation and reduces cost at the same time.

To describe the 4.0 Buyer - the Business Developer - I have also written an article about it (in French).

“The 2017 Buyer : (An) International Business Developer: a professional, piloting projects in the field looking for innovation and savings”.

If you want to know more about the Lavergne Procurement Matrix and/or to use it in your school or company, do not hesitate to contact me.

The Lavergne Procurement Matrix is protected by a copyright.

Tel : + 33 (0) 6 64 90 47 56

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Tuesday, 1 August 2017

Kraljic Matrix for Evaluation of e-Auction Opportunities

Andrey Matveev offered to write a guest blog for Market Dojo. Andrey has pioneered fully-managed eAuctions in Russian retail. Andrey’s expertise comes from both sides of the negotiation table, after years in sales and procurement in technology, oil and gas upstream, manufacturing and retail sectors.  


Use e-Auctions to negotiate with suppliers in your Leverage quadrant:

Your buying power enables more suppliers to be attracted and pooled into hard competition as e-Auction makes it easier to manage multiple simultaneous negotiations. More suppliers = more competition = lower bids. 
eAuction can be easily repeated. This allows the creation of a pipeline of scheduled price reviews every 3, 6 or 12 months (again, without applying additional pressure on the buyer). This supports the implementation of medium-term contracts.
All participating suppliers can see the winning bid. This motivates them to reduce costs and prepare improved offers for the next event.
Suppliers who compromise delivery can be suspended from the next event. This helps to reduce supply risks.

Avoid e-Auctions for irregular procurements, even when the contract value is relatively high. The fear of being suspended from the next event is a powerful feature that restrains suppliers from making doubtful commitments. Without this feature, e-Auction becomes a risky tool to use.

Use e-Auctions in the Strategic quadrant to perform random reality checks of your strategic partners. Position this as an inevitable ‘standard’ procedure in order to avoid damaging relationships. The existence of such policy would by itself motivate your partners into following the market situation.

Use e-Auctions in the Routine quadrant. Once developed, the template of e-Auction can be copied and repeated an unlimited number of times. Therefore, e-Auctions are an effective cost saving tool for sourcing highly-volatile commodities when seeking a regular price review under specific volume and terms (e.g. weekly fuel e-Auction).

The cost of managing and running templated events is relatively low when the buyer pays for software on a subscription basis (e.g. Market Dojo offers an unlimited number of events per month for just £500). Additional costs can be saved when e-Auction is used for sourcing multiple categories (subject to suppliers availability) – modern e-Auction tools allow simultaneous negotiation of up to at least 100 items.

Implementation

Before trying e-auction on categories selected by Kraljic Matrix, filter them against the conventional checklist:

Specs do not contain specific models and brands
Category is already sourced centrally or this change is easy to implement
Annual spend and anticipated savings are sufficient to cover e-Auction software and management costs (use 5% of improvement as a safe estimation)
Multiple purchases over a period of 12 months
Some price volatility over this time (incl. logistics)
Opportunity to implement nationwide price by assigning logistics to a supplier.

However, when you perform the trials of e-Auction in your organisation (which are aimed at demonstrating the potential of the e-Auction tool to your procurement team) it is worth paying extra attention to the industry in which the suppliers of shortlisted categories operate. (I also suggest hiring an independent e-auction expert to ensure an unbiased approach to category selection and management of the first trials)  

Tony Cram (2006) suggests in his book 'Smarter Pricing' industry conditions that are likely to lead to price wars. He suggests that these conditions may occur in almost any market or industry. 


This can be used as a checklist to identify categories in which suppliers are very likely to roll off into a price battle on your e-Auction, ensuring outstanding and illustrative improvement for your pilot trial. 

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Thursday, 20 July 2017

Market Dojo Release New Host Tutorials

Market Dojo has recently created a range of guides, research and tutorials that will assist hosts and participants to get the most out of the Market Dojo tool. 


The collection of guides includes process guides, category selection guides, business cases, sourcing guides and alternative negotiation approaches. These guides are available to download online but require users to sign up for free

However, for those looking for tutorials, the new collection includes bespoke recordings of new features and capabilities within the new responsive design.

The below list includes those new tutorials for hosts to help you get started and understand how to get the most out of the Market Dojo software.

Creating a new sourcing event
    • Signing Up
    • Creating the Event and Event Settings
    • Creating questionnaires
    • Creating Lots
    • Creating advanced Lots
    • Uploading documents
    • Crediting an Event & our Pricing
    • Creating a quick RFQ
    • Inviting Participants

Managing a current event

    • Managing Participants
    • Making Edits
    • Managing and scoring questionnaires
    • Managing documents
    • Using the Message Board
    • Managing RFQ or Qualification Bids
    • Progressing an RFQ to an Auction
    • Managing an e-Auction
    • Japanese eAuction
    • Managing an event with advanced lots

Admin

    • Dashboard, Admin and User Profile
    • Managing your organisation with User Hierarchy
    • Creating a Portal

Sandpit

    • Working in the sandpit
    • 60 Seconds Sourcing
    • Introducing the Lot Matrix

You can find more videos on our Youtube Channel here.

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Monday, 17 July 2017

Market Dojo announce Quick Quotes

Market Dojo is currently in the process of developing a "Quick Quotes" tool that will enable users to run efficient RFxs at a highly reduced cost that has very little barriers to adoption for both buyers and suppliers.


Currently, eSourcing adoption is generally limited to complex tenders and eAuctions with the majority of small tenders (<£20k) still being carried out through email. This presents challenges with centralisation and scalability. At Market Dojo we have seen this not only in the smaller organisations but also in large FTSE companies who have multiple systems already in place.  

The idea of Quick Quotes is to bring eSourcing to the masses providing advantages for its use at the lower tender size as well as having an application for the larger tenders.

Quick Quotes speeds up the eSourcing process through simplification and integration with email. Enabling participants to reply directly with an email and therefore reducing the barriers to participation.

The aim of Quick Quotes is to allow hosts to set up events even more quickly using a single page format. You will be able to invite unlimited participants to a single event, with the view for additional functionality such as live messaging, templates and library features to be added at a later date. Hosts would be able to clone events, create event templates or use our comprehensive event library to ensure that they can build the right event for their category.

Nicholas Martin, Technical Director at Market Dojo had the following to say:

"We are really excited to be working on Quick Quotes, it will allow hosts to quickly save time and money through an efficient and specialised RFx tool. From speaking to our customers, we know that the tool will be used on a range of different categories and beneficial to businesses of all sizes.

"We hope to release the tool in the very near future and encourage anyone to come forward with any comments or suggestions on Quick Quotes."

For further information on the tool please contact: enquiries@marketdojo.com

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Thursday, 13 July 2017

CPO's First 100 Days

Inspired by Donald Trump's first 100 days in office, Market Dojo are investigating what the first 100 days of a successful CPO would look like. Grey Tennyson, Chief Procurement Officer at VSP Global and formerly CPO at Salesforce discusses his thoughts on how he would transform your procurement team in the first 100 days.


You’re hired! After the jubilation of accepting a job wears off and you’re successfully on-boarded to your new company, you learn you have 100 days to develop a plan. This plan that will begin a journey of procurement transformation that surpasses the expectations you shared during the new hire process. The opportunity is ‘greenfield’: building out a procurement function where one didn’t previously exist or where the function never took hold for one reason or another.

You have 100 days to develop a plan.  What’s first?  

There are various approaches to transformation and the key is to find the right one for your project. The approach I will share is based on my personal experiences building out the procurement function (source-to-settle) at a Fortune 50 company, at a hyper-growth entrepreneurial company, and (most recently) at an established, well-diversified healthcare company.

First course of business – assess the current state if you didn’t do so during the interview process. Have a conversation with anyone willing to engage starting with your new team, executive leadership, and cross-functional stakeholders. You need to understand your inherited brand firsthand – including the perspectives and opinions of your inherited procurement function. These discussions are important on several fronts because they:


I recommend partnering with a change management guru and a project manager to articulate the business requirements that will form your vision, set a definition of success, and develop a communication strategy and cadence. Do not underestimate the impact of change and the new behaviours that are required to effect better business outcomes.

At my current company, we took a slightly different approach to transformation based on our unique combination of vision, culture, and employee demographics. Early on we reached out to Marketing to create a ‘drip campaign’ comprised of video vignettes, campus signage, and direct outreach. The whole effort centred on our mascot – Moolah, a big fury, purple creature that was accompanied by a tagline – ‘Spend It Like Its Yours’ (loosely based on the acronym ‘SILIY’ – pronounced silly). The objective was to have fun with the initiative, which is one of our values. The result was celebrity status for Moolah and greater acceptance of the initiative. Frankly, it was fun to see employees taking selfies of Moolah at all-hands-on-deck meetings.

Included below is a checklist based on my experiences to help develop your plan. Again, model or pivot based on what you observe in front of you and the expectations of procurement. There is no absolute right answer.  


Appreciate that procurement transformation is a journey with a starting point that is unlikely to ever end. You iterate, detour, and adapt to meet the needs of the organisation. Investment is required in the three buckets of people, process, and technology - and most importantly, the leadership team - to stay relevant.

You will encounter setbacks, and your ability to recover will test the team. How they (and you) respond will determine the overall success of the initiative. Most importantly – have fun if you are fortunate enough to have that as a key value at your company.


If you're interested in discovering more from Greg Tennyson, listen to the Art of Procurement discussing "A CPO’s View on Building Effective Procurement Teams".

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!