Introduction & Summary · 2019-05-21 · •Technology is reshaping the supply chain organization...

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Agenda

▪ Introduction & Summary

▪ Factors that will Disrupt the Supply Chain Function

▪ People

▪ Technology

▪ Environmental

▪ How the Supply Chain Will Change As a Result

▪ What this means for Procurement

Introduction

Factors that will Disrupt the Supply Chain Function

How Supply Chain Will Change As a Result

What this means for Procurement


About ProcureAbility

CONSULTINGadvises on strategyand cost reduction opportunities

ExclusivelyFocused on

Procurement

IT’S ALL WE DO

TALENT & RECRUITINGprovides permanentand temporarystaffing solutions

ANALYTICS &INTELLIGENCEdelivers valuable insight

• SupportingProcurementorganizationssince 1996

• Over 300Fortune 500clients

• More than5,000 pooledresources

• Assessment & Strategy• Procurement Transformation• Strategic Sourcing &Category Management

• On-Demand StaffAugmentation

• Recruiting

• Spend & Predictive Analytics• Cost & Scenario Modeling• Procurement Dashboards


Disruptors Require Profound Change to Survive

disrupt

[dis-ruhpt]

verb

1. to cause disorder or turmoil in

2. to destroy, usually temporarily, the normal continuance or unity of; interrupt

3. to break apart: to disrupt a connection

Historically, disruptors dramatically change how companies operate e.g.: the industrial revolution, computers, outsourcing

We are in a period of business disruption today that is greater than in the recent past

Disruptors force companies to innovate and change; those that do not are not likely to survive


APPLICATION:INPUT: INTERPRETATION:

The Future of Procurement

Supply Chain Disruptors & How They Will

Change Procurement

Better Anticipate Changes

Develop New Solutions

Plan Your Approach to Change

Add Additional Value to Your Company

Executive Interviews

Market Research

ProcureAbility Insights

About Our Study

Supply Chain Disrupters


Supply Chain Disruptors

Snapshot of participants, assessment

criteria, and key takeaways

50+ Factors are expected to disrupt

the Supply Chain function in ways not seen in the past 20 years:

Procurement’s bright future will require change to effectively navigate these disruptions:

• New operating models

• New skillsets

• New capabilities beyond traditional sourcing & category management

• Automate to reduce tactical workloads

25+ Procurement Executives Interviewed

37+ Industry Analysis and Whitepapers Reviewed

28+ Benchmarking Studies Assessed

80+ ProcureAbility Consultants Surveyed

• Traditional Utilities

• Private Industry (w/ focus of Utilities)

• High Technology Firms

• People

• Technology

• Environmental

• External

• Internal


External Supply Chain Disruptors

• Retention• Finding new talent• Tight labor market• Evolution of the Gig labor economy

• Lower/volatile wholesale power prices• Increased rate pressure• Tariffs & political instability• Sustainability pressure• Practicality of renewable energy and

storage• More common and more severe natural

disasters

• Smart technology “Behind the Meter”

• Big data / predictive analytics

Procurement

People

Environmental

Technology • Transportation automation

• Storage technology• IT/OT Convergence• Cloud computing

• EV’s• Blockchain• 3D printing• AI/RPA/Machine Learning• Cyber threats• 5G Wireless


Internal Supply Chain Disruptors

• Hiring constraints• New skills needed• Stakeholder misalignment• Aging workforce• High turnover (Gen Y and

Millenials)• Focus on cost savings

• Bad data• New technologies• Automation• New suppliers• Grid infrastructure upgrades• IT/OT convergence

PeopleTechnology

Procurement


Common Averages / Experiences

10-12 Months

500+ Pages

25% 50%

Typical length of a selection process

Typical length of a $100M outsourcing

contract (with appendices)

Clients unhappy with their

outsourced operations

Executives who know the

principles/ hypotheses of their main outsourcing

contracts


People Related Disruptors

Globalization & Virtualization• Virtual workforce is common

Competitive Talent Market• 50%+ of utility talent will retire in the

next 5-10 years (DOL)• 72% of employers are having difficulty

finding talent (DOE)• High tech companies attract top talent

Automation• World class procurement operates at

20+% lower labor cost with almost 30% fewer staff

• 80% of our respondents listed digital procurement as a priority, but less than 5% have highly automated processes

New Skills Required• Advanced analytics• Understanding of technical engineering &

design, advanced qualifications

Freelance Economy• 45% of the total workforce by 2020 will be

“gigging”


The Gig Economy


Technology Related Disruptors

Procurement

DISRUPTORS IMPACTS

• Increased use of AI & RPA

• Cloud computing proliferation

• Increased cyber threats

• More cost effective power storage technologies

• Smart home technology adoption

• Increased use of EV’s

• Blockchain adoption

• 5G & IT/OT integration

• Big data analytics

• Transportation automation

• 3D printing

• Renewable energy adoption

• Technology is reshaping the supply chain organization of the future

• Integration of disparate systems (SI proliferation)

• Types of skills needed are rapidly changing

• New sourcing initiatives and category expertise are needed

• AI and RPA are changing Procurement operations

• New product sourcing will merge with Product Development & Engineering


Electric Vehicle Charging

Customer Identification

Customer Engagement

Site Assessment

Customer Acceptance

Engineering Construction Commissioning O&M

Exam

ple

Pro

gram

Ne

eds

Fleet Ready

DC Fast Charging

Comm-unity Based

Level 2 electric vehicle (EV) chargers at multi-

unit dwelling retail, workplaces, garages

Provide make-ready charging infrastructure

for medium / heavy duty electric vehicles

Provide make-ready infrastructure for public DC fast charging stations

for light-duty vehicles

14,000+

Tesla Model 3’s sold in July


5G Wireless & IoT

Delivering

$12.3 trillion in

revenue in 2035

-IHS

Superfast Connectivity

IoT Ecosystem

Everywhere Connectivity

One-millisecond latency

“Real-Time”

Connectivity in Dead Zones. Augmented Reality, Tablets, Sensors, Monitoring

Better Data Collection

Mobile Workers,

Fast Access to Resources

GLOBAL


Environmental Related Disruptors

Procurement

DISRUPTORS IMPACTS

• Tariffs and political instability

• Rate pressure

• Sustainability pressure

• Lower/volatile wholesale power pricing

• Cost pressures

• Significant grid infrastructure upgrades

• Stakeholder misalignment

• Practicality of renewable energy & storage

• Attacks on electric infrastructure

• Natural disasters

• Rising prices & cost constraints = more pressure to generate savings & value

• Sustainability initiatives could make cost targets even more difficult to achieve

• These pressures will help align procurement with stakeholder groups


Storage


Wildfire Infrastructure Hardening

2018

46,129 Fires

6,985,637 Acres

• Build fire safe and fire resilient designs to reduce wildfire risk

• Eliminate contributors to an ignition

• Focus on keeping wires up

• Vegetation management

• Standardize designs

• Test new pole types

• Telco partnership

• Technology to support

• Utilize new construction methods

• Community outreach

How Procurement Will Change


People

Technology

Environmental

How Procurement will Change

Procurement organizations will need to be more flexible, with a different mix of permanent vs. contract resources (GIG economy)

The skillsets will need to change; from transactional to significantly more strategic

Procurement will need to add value in ways beyond traditional cost reduction/savings

Procurement will need closer alignment with stakeholder groups given some of the new challenges on the horizon


People Related Disruptor Solutions

Organizations are beginning to create a Hybrid Resource Model strategy using RPA & AI to minimize time consuming manual tasks

Permanent Employees

• Strategic day-to-day activities

• Category and Stakeholder management

• Staffed based on core workload

External Talent & Staffing • Integration with

internal processes

• Higher degree of control

• Temp-to-Perm option

• Scalability

• BPO

Consultants & SMEs

• Specialized expertise

• Knowledge transfer

• Intellectual capital

• Structured program

Hybrid Resource

Models provide “the best of ALL

worlds”

!

HYBRIDRESOURCE

MODEL

▪ Growing Labor shortage

▪ Procurement’s increasing obligation

▪ Singular solutions have too many constraints


What procurement can do to best manage these new models

Link corporate HR strategy with Procurement

▪ Procurement’s cost containment mindset may be at odds with corporate labor strategies

▪ Based on the corporate HR strategy, create a People strategy for the Procurement organization that optimizes the use of alternative workforce models

Identify new required skills

▪ Advanced analytics, data scientists, and data architects

▪ Technical proficiency

Don’t underestimate the cultural impacts of the GIG economy

▪ Historically, non-FTE employees were considered a different class of employee, and often treated differently

▪ Build a cohesive, inclusive culture for both full time and temporary employees

▪ Doing so will likely result in significant productivity benefits and improved employee retention


Knowledge management – centralized and coordinated

• Category Playbooks

• Stakeholder Requirements

• Sourcing Best Practice Database

• Market Intelligence

Category Knowledge

• Sourcing & SRM Toolkits

• Job Aids and Templates

• Total Cost Models

• Spend Analysis

Process Knowledge

• Business-Specific Tools

• Project Tracking & Reporting

• eSourcing Tools

Technology Knowledge

• Sourcing Training & Development Curriculum

• Skills Assessment & Certification

Training & Skills


Technology Related Disruptor Solutions

Procurement will need to expand their offerings beyond traditional sourcing and category management !

▪ Shift in the types of purchases procurement is supporting, from traditional engineered electrical equipment to leading edge technologies

▪ Expectation for rigorous analytics and intelligence

▪ Understanding of new markets and supporting category strategies

▪ Expertise in dealing with cyber security threats

▪ New skills for both customer facing and internal operational roles

▪ Broader application of Product Development and Value Engineering

EmergingTechnologies

Advanced Skillsets

Sophisticated Contracts

TRANSFORMATION


The Future of Procurement Analytics

▪ Spend Analytics

▪ Spend Categorization

▪ Self Service Spend Analytics &

Reporting

▪ Periodic Updates

▪ Cost Modeling & Should-Cost

Analysis

▪ Market Intelligence

▪ Real Time Performance

Dashboards & Scorecards

▪ Next Generation Spend Analytics

▪ Predictive Spend Analytics, including

Spend Forecasting

▪ Supply/Suppler Risk Forecasting

▪ Price & Market Forecasting

▪ Integration of Market Data and

Spend Data

▪ Integration of non-standard data

into Procurement analytics

▪ Social Media

▪ Newsfeeds

▪ Procurement Resource Analytics

▪ Resource Modeling and Forecasting

Procurement Analytics

Common Today

Future Capabilities

Expected


Robotic Process Automation

PO creation• Before 15 min• After 2.5 min

83%Productivity Increase

Software that replicates human actions to complete a task

What is RPA?

RPA can free up significant work hours throughout the procurement organization by automating routine tasks

Contract Update• Before 8 min• After 1 min

88% Productivity Increase

Vendor Creation• Before 15 min• After 1 min

93% Productivity Increase

What is Not RPA?

Example Benefits

Regular Macros

Automation supported by your ERP

Recent Projects

Procurement Operations Dashboard

Category Requisition Mapping

Spend Analysis

Supplier Enablement


Artificial Intelligence

Only 50% of large

companies have an AI strategy in place

Data Classification & Clustering Master data and order history for spend transparency

Data Cleansing Identifying data errors and KPI outliers automatically

PredictSimulations can be run to forecast spend volume and material price changes

ComplianceDetect contractual variances in real time (Price or SLA)


Environmental Related Disruptor Solutions

Procurement will need to identify new means of aligning with stakeholders, creating new opportunities for involvement and value creation

!▪ Stakeholders must be

continually educated on the value of procurement, beyond execution & negotiation

▪ Creative sourcing and category management approaches must be collaboratively designed

▪ Procurement must partner to drive business strategy leveraging market intelligence, competition, and fact-based analytics

PROCUREMENT

Political Pressures & Regulatory Controls

Sustainability Pressures

Increasing Demands


By applying the principles of Agile development to the selection process, we can improve speed and outcomes

Agile Sourcing and Procurement Approaches

Structured process allowing for timed deliverables, speeding process throughput

Gate review “ownership” between functions improving outcome

Improved completeness and quality of documentation

Collaborative work between teams

Benefits

Up to 37% improvement on forecasted time to

completion of end product

No surprise in the capacity of key people to

work together

No surprise in the solution after the contract is signed

Better momentum, faster decision-making

What This Means for You


What This Means For You

• Don’t underestimate the fundamental change that will be required to survive (and thrive) this period of disruption

• Engage your organization and stakeholders to get their ideas and buy-in regarding the changes required

• Create a plan of attack that will address each area of disruption, and incorporate that into your Procurement strategy and roadmap

• Don’t view these disruptors as a threat– organizations that are proactive and address these head-on will:

• Be stronger and more competitive

• Be seen as a more interesting place to work

• Create a culture of innovation


Thank You

Conrad SnoverExecutive Vice President

ProcureAbility

(415) 806-6726

[email protected]://www.linkedin.com/in/csnover/

I’d appreciate your

feedback; please

submit via the app

Introduction & Summary · 2019-05-21 · •Technology is reshaping the supply chain organization...

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