Procurement in the Nordics 2020
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Ostensibly, the Procurement Department has two mandates: buy what the organization needs to achieve its goals and spend as little as possible along the way. With globalization, disruptive technology and opportunities only becoming available with increasing digitalization, the age-old mantra of the Procurement function is changing. In this webinar we will rely on the latest market research from IDC to help better understand where procurement departments are seeing their biggest challenges and how digital transformation will shape their development agenda. We will discuss: The IDC survey results for Procurement in the Nordics 2020 Key challenges faced by Procurement The 80-20 rule - is it still relevant? Direct vs Indirect How procurement in the Nordics is unique
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Procurement in the Nordics 2020
- 1. An OpusCapita Webinar Procurement in the Nordics 2020
- 2. Agenda Introductions Introduce the IDC White Paper Maturity Complexity Servicification What makes the Nordics different? Closing Remarks
- 3. Rowan Lemley (host) INTRODUCTIONS Miia Lönnqvist, Sales Executive, OpusCapita
- 4. OPUSCAPITA BY THE NUMBERS Established 1984 ~400 Employees 65m € Revenue 2018 3000 Customers with users in over 100 Countries Over 1 Million Suppliers and 100,000,000 eTransactions Over 40,000,000 products and services bought & sold Over 130 Billion € in payments annually
- 5. GLOBAL PAYMENTS PAYABLES AUTOMATION SOURCING & SUPPLIER ENGAGEMENT RECEIVABLES AUTOMATION OPERATIONAL PROCUREMENT CASH MANAGEMENT Comprehensive supplier information management and agile sourcing for goods and services. Improve your cash inflows and reduce the time spent matching payments to invoices. Create a centralized product catalog with a modern guided buying experience with full mobility. Consolidate and optimize your in- house bank and liquidity management functions. Enable control and compliance over AP while dramatically lowering transactional costs. Connect directly to over 200 banks, SWIFT certified for global payment coverage. OpusCapita is a platform that combines source-to- pay & cash management, enabling full source-to-cash process optimization. HOW WE SUPPORT YOU CONNECT, TRANSACT AND GROW ON THE OPUSCAPITA BUSINESS NETWORK
- 6. IDC Survey and White Paper
- 7. Maturity The Nordics are highly mature, technically advanced and yet, not uniformly. Classic KPIs still rule but as challenges change, so will the goals. Report Summary Complexity Complexity in procurement processes has become the top challenge. Technology both creates this and solves it simultaneously Servicification For many years, services procurement has been increasing. What were products are now offered as services.
- 9. POLL How would you best describe the purchasing of indirect goods & services? - We use a best of breed solution - We don’t have any real process in place - We have several standalone systems - We use email/phone - We use our ERP
- 10. Questions: How do you see the difference between using best of breed vs ERP? Where is the trend going? Indirect Procurement in the Nordics
- 11. POLL What are your most important procurement objectives? - Cost reduction - Risk mitigation - Business value - Process compliance - Auditability
- 12. Questions: How do you see the relationship between something so quantitative as cost reduction and the rest of the objectives? How do you see the role of Procurement is changing over time? Savings is still #1 – but for how long?
- 13. POLL Describe your operating model - Procurement sit within local or line of business teams - Procurement is a central team - Hybrid: procurement is split between central and local teams - No formal structure
- 14. Questions: What advantages exist for different organizations considering centralized vs decentralized procurement operations? Where do you see technology impacting these results in 2020 and beyond? Is technology driving flexibility within operations?
- 15. POLL What are the biggest challenges faced by procurement? - Complexity - Changing business needs or unplanned projects - Knowledge/information sharing - Talent availability - Stakeholder support
- 16. Questions: What do you feel complexity represents in this result? How do you feel technology impacts complexity within the procurement process? How does one mitigate complexity? What is driving the increase in complexity?
- 17. POLL Which process drives the day-to-day work of your procurement team? - Strategic category plans - Stakeholder project plans - Ad-hoc needs - The source-to-pay process - Don’t know/no answer
- 18. Questions: How do you see technology impacting where the procurement team focuses their energy? What is the full impact of ‘ad-hoc needs’ fulfillment on the procurement function? Is procurement becoming more – or less strategic?
- 19. POLL Which of the following category areas present the greatest challenges? - Services - Logistics - Product & service bundles - Commodities (energy, raw materials, etc) - Subscription technology (cloud/saas)
- 20. Questions: What is it about services procurement that makes it so difficult? Do you feel different types of organizations or industries will be more impacted by services than another? Do you see servicification as an ever-increasing trend? Is servicification changing the game?
- 21. Summary Miia Lönnqvist, Sales Executive, OpusCapita
- 22. Digitalizing global trade One customer at a time What we do. How we do it.
Notes de l'éditeur
- Founded 1984, approximately 400 employees, 65m€ in 2017
- Procurement functions in the Nordics are relatively advanced and on a par with their equivalents in the rest of Western Europe and the United states. The sophistication of procurement varies by industry and the Nordic countries are home to several industries where strong procurement is essential, such as the manufacturing sector in Sweden. When we ask procurement functions in the Nordics what their objectives are (Figure 1) we can see that business value is often one of the top two priorities. From the same figure we could conclude that Sweden is home to the region's most advanced procurement functions, due to the more closely balanced prioritization of cost reduction and business value. As with procurement function in the rest of Western Europe, the reality is that the majority of functions continue to focus on cost reduction, while risk mitigation and business value creation come a close second. This picture is changing quickly though, as procurement functions begin to accept that not all risk or uncertainty is bad, and that business value will ultimately overtake cost reduction.
- Procurement functions in the Nordics are relatively advanced and on a par with their equivalents in the rest of Western Europe and the United states. The sophistication of procurement varies by industry and the Nordic countries are home to several industries where strong procurement is essential, such as the manufacturing sector in Sweden. When we ask procurement functions in the Nordics what their objectives are (Figure 1) we can see that business value is often one of the top two priorities. From the same figure we could conclude that Sweden is home to the region's most advanced procurement functions, due to the more closely balanced prioritization of cost reduction and business value. As with procurement function in the rest of Western Europe, the reality is that the majority of functions continue to focus on cost reduction, while risk mitigation and business value creation come a close second. This picture is changing quickly though, as procurement functions begin to accept that not all risk or uncertainty is bad, and that business value will ultimately overtake cost reduction.
- Adam
- The majority of Nordic procurement teams are also to some degree centralized, in each country at least two thirds of firms are either centralized or hybrid in nature. This region does seem to have a particular preference for the hybrid model (Figure 2), which proponents describe as being the best of both worlds, with the power and efficiency of centralization combining with some local freedom. The hybrid model may be popular due to its fit with Nordic business culture, where flat management structures and delegated decision making are the norm.
- The tendency to measure on cost reduction emerges because of some major barriers which both prevent transformation and can compromise the day to day operation of the procurement function. If we ask Nordic procurement functions which challenges they face (Figure 3) complexity is highlighted by nearly half of all respondents. Procurement faces a particular challenge with complexity – procurement as an explicit function is relatively new – and this challenge is typical for any newer business function. Complexity has been accumulating since the founding of the business and can double when a merger or acquisition occurs. It can take procurement functions many years to remove this complexity through standardization and rationalization.
- Digging more deeply into the challenges procurement teams in the Nordics face (Figure 5) we see that certain categories stand out, and services and logistics top the list. The top of the list is dominated by categories with complex deliverables, rather than those with complex supply markets. While services do not have the high transaction rates of tactical "tail spend" or the negotiation challenges of commodities, the process of establishing customer needs, sourcing these and then embedding the deliverables in a contract and service level agreement is a time consuming process. Part of the challenge with services procurement is always having to consider what might have been omitted or gone unspecified. Thankfully, modern e-procurement solutions are able to aggregate supplier catalogs with virtually unlimited numbers of items so if it may be easier to pull in a catalog of 1 million items rather than negotiate it down to the 30,000 you might think you need.
- Many industries are going through a process of introducing new business models, often a result of digital transformation. Many businesses are choosing to move to service business models, joining the "as-a-service" trend. This and continued outsourcing means that the proportion of spend that is classified as services continues to rise, placing a pressure on the procurement function to improve the ways it handles the procurement and management of services contracts. Procurement skills, processes and technology must adapt to better enable businesses to operate int the services economy.