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Next Generation Procurement

Handout PresentationAnnual Conference Croatian Association of PurchasingZagreb, November 14, 2019

Prof dr Frank RozemeijerNEVI Chair Purchasing and SCMMaastricht University & FRConsulting BV

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1922

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Value Value ValueValue Value Value Value Value

Value Value Value Value Value Value Value

Value

Value

ValueValue Value

Value

Value Value Value

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Unlocking Value…

1. DHL will ‘Re-write the rule book’ andset a new benchmark for delivering freshproducts to KFC in a sustainable way

2. KFC has specifically chosen DHL and QSL fortheir reputation for innovation in logistics

3. Going Live on Valentine’s Day 2018

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Only 3 days later…..New ordering system collapsed!!

DHL failed to match data from KFC’s JIT Ordering process to its

new system, as a result the on-board computers of drivers did not

function properly… confusing the entire delivery schedule!

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Price is what you pay Value is what you get!

Warren Buffet

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Sourcing Business Model theorysuggests sourcing should be

thought of as a business model between a buyer and supplierwith the goal to optimize their

value exchange.

Value

CostRisk

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Price

Product

Processes

People

Purpose

The 5 P’s of Procurement

Digitalisation ServicesSupply chain Work processes

Creativity Leadership ProactivityBehavior Collaboration

Ethics Culture NormsSustainability Values

Quality

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Value creation is difficult in a VUCA world full of Wicked Problems

Multiple stakeholders with multiple views

+Low transparencyof problem, causes

and solutions

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Top-10 Wicked Procurement problems (not in rank order)

1. We need to be a Savings Machine and a Strategic Business Partner2. Our internal customers want speed, but they involve us too late!3. Our management is risk averse, but asks us to work with small start-ups and co-

innovate with key suppliers...4. Balancing Business impact and Functional impact 5. Negotiating commercial conditions for running business and at the same time

discuss future (co-)innovation with suppliers6. How can we (co)create better customer/stakeholder experiences?7. How to multiply success by collaborating across functional silo’s?8. How to create headspace for innovation, whilst being occupied with so much

short-term operational fire fighting?9. What category sourcing strategy allows us to contribute to profitability and

social responsibility & sustainability10. How to win the war for world-class procurement talent, while we are not the most

attractive function for most young high potentials?

Adapted from: Stanford research, 2008; ISMC Workshop, 2016

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“To survive in today’swicked world, Procurementorganizations must execute

well in the present andadapt well to the future” at

the same time. (Adapted from Beinhocker. 2006)

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Less staff

Morestakeholdersto engage

More conflicts

of interests

Higher demands

of the business

Less timeMore

Complexity

Less budget

More open innovation

Moresustainability

More complexsupply networks

Increasing Job Demands…

...what about the Job Resources??

Prof dr Frank Rozemeijer, 2018

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Project 1 – Where would you invest?(Hummel, 2017)

0%

5%

10%

15%

20%

25%

30%

35%

40%

Coming 3 Year s Coming 3-5 years More th an 5 years

Budg

et div

ision

acro

ss te

chno

lgies

Investment Exercise

Data AnalyticsCognitive ComputingRobotic Process Autom atio nClo ud Comp utingInternet of ThingsSo cial Media

Source: Hummel & Rozemeijer, 2017; YPP ExperimentSource: YPP workshop, N=20, 2017

CognitiveComputing/ AIData analysis

Robotics Faster & Cheaper

Fear of the newSkills gap

Data issues

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Project 2 – Blockchain (de Bie, 2018)

(N=13)

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Project 3 - Expected impact Blockchain (van Schuur, 2017)

Smart contractsTransparency

Automated paymentDigital trust

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“We should not be worriedabout how much the internet is impacting traditional business,”

Ma said recently. “Rather, we have to use internet and AI to

our advantage … Machines cando what people can’t. We must

make machines our best partners, rather than letting

them replace us.”

Youtube: “Jack Ma and Elon Musk hold debate in Shanghai”

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1954 Mercedes-Benz

Formula 1 Racing

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ArtImagination

Creative insightsInnovation

CraftPractical ExperienceOn-the-Job learning

Professional excellence

ScienceData Analysis

Systematic evidenceLogic reasoning

Procurementas a profession

Procurement will never be just an algorithm!

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Redesigning the Procurement Value Proposition

1. What Procurement services can we offer to help our colleaguesin doing their jobs more effectively and efficiently?

2. How can the way we deliver our Procurement services beimproved to better fit our colleagues’ wants and needs?

3. Can we adapt the way we interact with our colleagues to betterfit their wants and needs?

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Social innovationneeded!

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Next Generation Procurement professionals are tapping more into the right side of their brains!

ContractControl

ComplianceCost savings

Cash

Creativity!Courage!

Connectivity!

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1. Stimulate your peopleto be curious and more deeply CONNECTED with their suppliers, colleagues andstakeholders!Connectivity à Social networks,Stakeholder & Supplier intimacy, Deepunderstanding through active listening,,Collaboration, Co-creation, Customercentricity, Service oriented, Closepersonal relationships,…

© Prof dr Rozemeijer, 2019

Connect to Innovate!!

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2. Start igniting CREATIVITY in Procurement

© Prof dr Rozemeijer, 2019

of yourCreativity!!

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Our research shows: creative sourcing strategies translate in better bottom-line results... Team Creativity Climate is main

driver! (Kiratli et al, 2016)

Creative

skills

Task

Expertise + Cost savings+ Working capital

More Creative Sourcingstrategies

© Prof dr Rozemeijer, 2019

Diversity

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3. Show COURAGE to challenge the status quo!

Courage à Pushing boundaries,Challenging the business, Rethinkingparadigms, Expanding the role ofProcurement, Counteracting prejudices,Taking smart risks, Questioning actionsinconsistent with (y)our values, SharingBrilliant Failures,...even when confrontedwith resistance.

“Dare to be different, without being stupid!”

“Say No and sleep well at night!”

“I can be difficult, but I promise that it is worth it!”

© Prof dr Rozemeijer, 2019

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Cost Cash Contract Control ComplianceComplex world Customer driven

Choices Company ChainConsequences Conflicts Conversations Change

Competences Capabilities Confidence CuriousityCulture Climate Citizenship Crowd Cognitive Computing

Do you C the future of Procurement?

Creativity 2 InnovateCourage 2 Challenge

Connections 2 Collaborate

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