Discuss, debate and exchange ideas on latest trends and opportunities in the Business Process Outsourcing (BPO) landscape. Deliberate on adding “business value” to clients, vendors, employees and various other stakeholders to enhance customer satisfaction and sustain long term partnerships.

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September 28, 2016

Bus number 221 to procurement 'Nirvana'



There are instances where your 'plan' gets hijacked by something urgent and you're not able to focus on the planning or strategy part of your job. A lot of times there is no time to even sit down and think in solitude about the problem/ situation or a strategy....


Well...what does that mean? Let's find out. Procurement functions have long been grappling with this dilemma of where they should be spending their time and energy. More often than not, due to the nature of the responsibility, it's the urgent that gets priority over the important. How many of you were busy today with at least one of the following?

- An unforeseen delay in supply of some material or service by a supplier and the whole world is on the hotline asking what is being done about it, not to mention the urgent review called by the boss to discuss the same

-  A sudden price volatility in some commodity and the organization expects you to know how to react immediately to it

- A quick spend report on some category or sub category/supplier which your super boss asked

- You have a supplier meeting tomorrow and there is no prep done

I guess there are many more such instances where your 'plan' gets hijacked by something urgent and you're not able to focus on the planning or strategy part of your job. A lot of times there is no time to even sit down and think in solitude about the problem/ situation or a strategy. Most of the time, this is done in a rushed manner in some brain storming session where typically you're rushing from one 'storm' to the other. You keep thinking 'when is this madness going to end'?

So is there a solution or are we condemned to a life of living in a perpetual 'crisis' situation in procurement?  Well, it appears there might be some light at the end of the tunnel. Some wise men (and women) have come up with operational frameworks to enable a better focus for the procurement function. The 2-2-1 Framework is one such way which I believe brings a lot of alignment to procurement's objectives.


So what is this 2-2-1 Framework? It simply states that you spend 2 days in a week (or 40% of your time) with your stakeholders, 2 days (or 40% of your time) with suppliers and 1 day (20% of your time) for internal procurement work. The framework by itself sounds very simple however it needs a lot of enablers for the procurement function to be able to implement it. What is the journey and the steps and actions required to reach the 2-2-1 destination? We'll discuss each of these enablers/actions as the 221 bus takes a stop at each of these enablers along the route. The next stop is: Spend Analysis!

September 21, 2016

Do you have the right talent to deliver your procurement strategy?

 
60% of CPOs today are not confident of the capabilities and skills within their teams to deliver their procurement strategy. Is it because procurement strategies have become more challenging and thereby more difficult to achieve?


A recent survey amongst senior procurement leaders across the world indicated that over 60% of CPOs today are not confident of the capabilities and skills within their teams to deliver their procurement strategy. This is a drastic increase when compared to the 48% number returned by the same survey conducted two years ago!! A disturbing outcome and what does it tell you?

Is it because procurement strategies have become more challenging and thereby more difficult to achieve? Or the same strategies, but higher targets, or have the objectives of the procurement function changed and thereby different strategies to be applied requiring different skills and capabilities? Or is it that we, as a function, are still not able to attract the right talent? After all, working in Procurement is still not considered to be the "hottest" job in the world and requires to be spiced up when telling your friends you're working in it? Isn't it? It is something like being the fourth referee on the soccer field.

I tend to go for all of the above. For example, despite the fact that cost reduction is still considered to be the top priority for CPO's, the added value our function can bring is so much more. Controlling and managing risk, ensuring corporate social responsibility and/or bringing in new innovations are just some examples of that. These topics require to be embedded in the overall procurement strategy as well.

Now, let's take the two aspects of cost reduction and bringing in innovation separately and link them to the skill sets required of today's procurement team. Isn't there a potential conflict? Do you believe a supplier is still willing to bring you innovation if it has been continuously hammered by your procurement team to deliver year on year cost savings..? I think the majority of your suppliers won't. Hence, the way to approach your supply base requires modification and alternative strategies to be set. Being knowledgeable of these alternative strategies and more important being able to apply them in a consistent manner require different skills and capabilities of the team. Old school bullying your supplier doesn't work here.

What it comes down to is being able to attract and retain the right talent pool that has the skills to deliver the functions strategy. And this in my view is THE continuous challenge. How can we convince those ambitious eager beavers that working in procurement is actually challenging and really great fun? Maybe it is good to share my own experience as having majored in international marketing and in business science, I coincidently ended up in procurement and have been working in it since the last 19 years. Procurement has allowed me to travel around the world, exposed me to different cultures, enabled me to meet inspiring people, participate in a leadership program at International Institute for Management Development (IMD), taken me out of my comfort zone and helped me grow as a person.

Curious to get your views and thoughts on this!!

September 13, 2016

The "Procurement's Trilemma" and how to tackle it


Does the word "Trilemma" even exist for anyone to even begin comprehending the title of this post? The answer is yes. Webster's dictionary succinctly describes it as a state of things in which it is difficult to determine which one of three courses to pursue.


You may ask upfront -- does the word "Trilemma" even exist for anyone to even begin comprehending the title of this post? The answer is yes. Webster's dictionary succinctly describes it as a state of things in which it is difficult to determine which one of three courses to pursue.

What is procurements' trilemma then? It births from the fact, that in every for-profit organization, the procurement function is expected to compulsorily meet three goals:

(1) Drive cost reductions every year from third party spend, typical target is =>5%.
(2) Make suppliers provide exceptional service, innovative solutions and liberally invest big financial sums at short notices.
(3) Get most favorable credit terms from suppliers, the longer the better.

So here is the snag with these goals. However hard you try, you cannot achieve all three together. When you achieve any two, the business deal negotiation positions and BATNA (best alternative to a negotiated agreement) force you to sacrifice the third.

Is there a remedy to deal with this trilemma? The answer is yes and no both. No, for those organizations which believe that good suppliers are only those who help them achieve all the three goals. Typically, FMCG and retail organizations exhibit such practices with their procurement functions mostly reporting into finance function. On the other hand, organizations where business strategy is crafted to work with few credible suppliers and help them grow their businesses profitably, seal supplier contracts that help them achieve two out of these three goals. Automotive, aerospace and high tech manufacturing firms typically exhibit such business behaviors.

Smart procurement buyers make sourcing decisions that lead them to achieve two goals trading off the third sometimes and rightly so. However, this realization must come to their overseers that this is the best procurement can do and it is they who need to reconsider the need to continue to have all the three goals mandated on procurement to deliver for each contract.

Do you have any experiences to share? Feel free to expand.

September 2, 2016

As conventional BPO fades out, it's time for next-gen BPO innovators!

"Differentiate, innovate, automate, sustain" is today's mantra. Hence, BPO providers need to be on their toes on fine-tuning, building and acquiring capabilities at a rapid pace.


"Robotics Process Automations, Artificial intelligence, Machine Learning" - you heard it right. These were yesterday's buzz words and today's practical ones. These words are now becoming more and more meaningful, relevant and real for BPOs.

Labor arbitrage, global delivery model, process improvements, bolt-on technology automations, optimizations, and service levels have become a thing of the past. The BPO world is already in an era of technology led innovation, as it is the case in other industries as well & quite rightly so. Business value, end-to-end KPI ownership, operational and business analytics are gaining more and more significance.

Practically what does this mean for BPO providers?

If you have a close look at BPO provider's penetration, over the period of the last 4-5 years, there were a whole lot of new entrants to the market. Of course, the capabilities of these individual providers vary from each other. While a majority of the BPO service providers have the capability to deliver repetitive, non-core, transactional scope of work from a low cost offshore location, the time has come, which questions the mere existence of service providers in the market vis-à-vis these capabilities.

Automation is a tactical priority for the buyers in the market and this priority is here to stay. Almost 4 out of 5 buyers give maximum weightage to automation led transformation/innovation of their business processes, be it finance & accounting, procurement, order management or customer services.

Automation is nothing new to the BPO industry, but the way it is re-shaping the industry itself is quite different, unique & complex too. A combination of aspects like innovation, re-engineering, design thinking backed by strong technology capabilities are re-defining the way conventional BPO services are being delivered.

In short, the time is ripe for automation led digital transformation of services under the BPO umbrella and only those providers who can manage this transformation are here to stay.

Here is the snapshot of how the BPO industry has evolved over the period of years, changing buyer focus/priority areas and its resultant impact on the BPO providers.
 


Success ingredients for BPO today

As the expectations from BPO providers are moving northwards, for all the right reasons, the number of BPO providers who can sustain buyers' rapidly changing expectations are the ones who will remain. The critical success ingredients for today's BPO providers would include:

• Top line & bottom line impact - A service provider is being looked upon as a business partner and one critical expectation is how the service provider can positively impact an organization's top and bottom line.

• Automation - The ability to deliver extreme automation for end-to-end processes without compromising on controls and compliance is increasingly gaining importance. These would include platform solutions, robotics, analytics infused with artificial intelligence / machine learning capabilities, thereby positively impacting efficiency, effectiveness, experience and business value.

• Integrated IT and BPO capabilities - This is one of the key requirements as the number of multi tower IT + BPO deals are in an increasing trend.

• Innovation - Innovation at all means, is the expectation from the buyers in the market and buyers are willing to work closely with the providers to achieve innovation.

• Ownership of end-to-end KPIs - The provider being a transformation partner to the buyers, are expected to own end-to-end KPIs and take responsible for the ultimate outcome of business processes.

Conclusion:

"Differentiate, innovate, automate, sustain" is today's mantra. Hence, BPO providers need to be on their toes on fine-tuning, building and acquiring capabilities at a rapid pace. The next-generation BPO service provider will need to make significant investments to deliver on these expectations and continue being relevant in the outsourcing market.



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