Trade wars, pandemics, and chaos: How digital procurement enables business success in a disordered world

By Dr. Elouise Epstein and Len DeCandia

This book is an in-depth look at how to strategize, evaluate, and approach the wildly exciting world of digital procurement. More than any other enterprise function, procurement has grown from back-office cost control to strategic business partner. Today's procurement practitioners are at the forefront of innovation, sustainability, and social r

• Language: English
• Publisher: Kearney
• Release date: Jul 20, 2021
• ISBN: 9781736998113

Dr. Elouise Epstein

Dr. Epstein is a digital futurist and Kearney partner based in San Francisco. She has over two decades of experience working as a trusted adviser with clients to develop digital procurement and supply chain strategies.Known for her dry wit, historical anecdotes, and direct tone, Dr. Epstein is a frequent presenter on digital procurement. She is author of How to hack your supply chain: Breaking today, building tomorrow, Trade wars, pandemics, and chaos: How digital procurement enables business success in a disordered world, and a co-author of Disruptive Procurement: Winning in a Digital World.

Book preview

Foreword

Beyond accelerating the digitization of business processes, the pandemic of 2020/2021 has thrust procurement’s practices and value in supplier relationship management to equal footing with customer relationship management. The decades-long struggle for the seat at the table is translating to the need for a seat on the Board, and maybe even advanced competencies in the corner office. Empty shelves, darkened factories, closed borders, and other obstacles have tested global supply chains to their limits. No industry was immune and a time for evaluation and reinvention is upon us. In my current role leading the procurement function in the world’s largest healthcare company and after decades of guiding supply management transformations, I found myself challenged by the greatest healthcare and humanitarian crisis of our lifetimes, similar to my many chief procurement officer colleagues. My most recent experience deploying a digital transformation prior to the onset of the pandemic stretched our future-ready infrastructure to an immediate need to be ready now, and we stood the test. We were only able to serve the needs of our many stakeholders in these difficult days by having that future-ready foresight and leveraging the investments comparable to those that you will review in this book.

Through her many experiences and passion and commitment for future readiness, Elouise Epstein captures the shock and impact of the pandemic on the supply chain, specific to sourcing or supply management. She provides an honest and enlightened view on a decades-long, one-dimensional view of procurement and supplier value contributions. Our current times have exposed the critical need for investment in enabling technologies, advanced practices, and most importantly, staff competencies in digital literacy that elevates data analytics and insight-driven decision-making. Elouise and I share many common experiences in her 20-plus years as a consultant and collaborator for Kearney. For me over the past 25 years, I have been in the role of either the chief procurement or supply officer for four exceptional Fortune 100 companies. These assignments have included the deployment of next generation technologies, commensurate with embedding practices and shaping elevated competencies that have delivered measurable P&L contributions. Elouise’s book will inspire you to ignite and press on with your plans and actions for change, regardless of where you are in your transformational journey. Leadership resides in all organizations irrespective of title. The great responsibility of leadership is to anticipate and prepare for the future, or as our world has painfully shown us, for the unexpected.

This book is a transparent and fearless view of pre-pandemic obstacles or the many villains that have hindered progress for the procurement function. It provides an opportunity for you to evaluate the reality of your current environment with a critical, honest assessment. Elouise educates and builds on the transformational advancement of cloud-based technological tools that provides freedom to supply management from the heavy and rigid ERP technologies holding back an agile and resilient supply base. She educates the reader on the pallet of technological choices which help to build a people, process, and automation plan that will guide and position you for your team’s hero journey of the procurement function and organization-wide supply management competencies that will allow you to be valued contributors to all of your business stakeholders. The stakeholder community has expanded dramatically beyond the single-minded view of profit or savings. Procurement has the distinct opportunity to be reframed and repositioned as an essential hub for your organization’s ESG (environment, social, and governance) strategy. Moving beyond protecting your company’s brand or image, supply management practices in diverse supplier strategies can help drive positive social impact outcomes. Visible and leading practices in citizenship and sustainability can be amplified through your supply base by elevating expectations and sharing best practices with investment in mentoring. The 21st century procurement team recognizes that their stakeholder community goes beyond customers and shareholders: it includes all your fellow employees, your supplier’s employees, and their respective communities.

Expanding procurement’s role and influence in an effective and efficient way requires a step change in competencies and skills that are discussed in the later sections of the book. Investment in the development of talent and engagement of that talent to make the function a destination or critical development assignment for future leaders is a legacy for all current CPOs and their leadership teams. Exceptional foundational competency in category and supplier management must be supplemented with business skills in financial analysis, partner engagement, and empathy capabilities that include active listening, storytelling, innovative thinking, and persistence in driving change.

Elevating the engagement model both internally and externally to valued partner status is dependent upon two fundamental pillars: trust and competency. Trust, or respect, is earned one drop at a time and can be lost in gallons, so every engagement at all levels of your teams is important. Having your team aligned on a common vision of the future and an honest assessment of current state is an outcome of following the methodology of plan development outlined in this book. Establishing a common vocabulary, facing into and dismantling roadblocks with a strong commitment of bringing every one of your stakeholders along with you is fundamental to success. Your personal commitment to being a lifelong learner through the experiences and insights shared by Elouise is an affirmation of your personal commitment to growth and development. A leader should role-model these behaviors of investing in their personal growth. Even after 40 years in industry, I have always considered myself to be curious and restless, always open to new thinking.

Similarly, circumstances have positioned you in our chosen profession to use these insights to make a difference; as supply management professionals and leaders we can and must use these tragic times to make the world a better place.

In closing, this book challenges you to evaluate your perspective. Elouise, with her forward-thinking insights and practices, embodies the perspective of a futurist. My many experiences during times of crisis, growth, and change within industry would most likely classify me as a realist. Reading this book and shaping a plan that best addresses the culture and business climate of your situation will allow you to be an optimist. A unique window in time to be aware, inspired, and motivated to create a future of contribution and experience beyond what you had hoped in your chosen profession.

Allow me to share a personal experience in creating an environment of partnering. Over 20 years ago I was the Founding Chair of the Rutgers University Center for Supply Chain Management, a role I maintained for 12 years before accepting my current position on the Rutgers Business School Advisory Board. At that time, we were still in the early days of the science of supply chain management and it was an opportunity to build a place of collaboration for my industry colleagues and invest in future leaders. It continues to be a humbling experience to see that the supply chain management program at Rutgers University is the second largest program in the US and is recognized as a global leader by Gartner and others. This is an example of one of my proudest legacies.

What Elouise presents in this book may be your opportunity to create your own personal legacy that pushes our profession forward. I believe you are capable and you should take on this challenge. You are positioned as collaborative procurement leaders to invest in the tools that will deliver the ability to scale solutions that will drive positive business, environmental, and social outcomes that will make the difference our world needs. Let’s learn and work together to build a future that is better from the experiences and learnings of this dreadful pandemic.

Len DeCandia

Princeton, New Jersey

Current Global Chief Procurement Officer – Johnson & Johnson

Former Chief Procurement Officer – The Estée Lauder Companies Inc.

Former Chief Supply Officer – AmerisourceBergen Corporation

Former Chief Supply Officer – Roche Pharmaceuticals North America

Acknowledgments

This book would not have been possible without the generous contributions of many people.

First, I would like to thank Len DeCandia for contributing such a gracious and thoughtful foreword in addition to critical feedback on the manuscript. I am both thrilled and honored to receive his insights, guidance, and mentorship. I am equally grateful to Jeff Hewitt, Tiffany Hickerson, Gillis Jonk, Arshita Raju, and Bill Frazier for contributing material to this book.

Also, a sincere thank you to Richard Williams from PSG, Mike Cadieux from Procurement Foundry, Rajesh Kalidindi from LevaData, Joel Hyatt, Jared Hyatt, and Keith Hausmann from Globality, Ben Winter from Fairmarkit, and Cyril Pourrat and Adam Brown from BT Sourced, all of whom granted me a behind-the-scenes look into their operations.

My sincere gratitude to my colleagues Ana Conde, Tom Kline, Joel Saldana, Lynne McDonnell, Shakil Nathoo, Prasad Poruri, Vishal Bhandari, Carol Cruickshank, and Jane Wanklyn for their intellectual partnership and collaboration. Emily Deng deserves a special award for helping to organize both me and everything that went into this book.

I would like to recognize the contributions of Kristin Boswell, Haley Dunbrack, Briana Flosi, Chaillé Biddle, Kerry MacKenzie, and the Kearney production team for breathing life into this book and getting it ready for the world. A special thank-you to John Blascovich for coaching and championing me throughout this entire process and to Mark Clouse, Steve Mehltretter, and Fred Eng for their financial support in bringing this book to life. Similarly, my sincere gratitude to Kearney Partner Emeritus Joe Raudabaugh without whose support I would not have had this extraordinary career.

I would like to recognize John Clayton for editing and helping to bring this manuscript to a level of readable clarity.

I am immensely grateful to Sheila Gulati, Mike Schiappa, and Paul Martyn for their reading and commenting.

I am indebted to Jan Fokke van den Bosch, Brian Smith, Julian Hooks, Heidi Landry, Shashi Mandapaty, Anthony Adeleye, Bill Gunn, Sally Macaluso, and Jim Martin, for the opportunity to partner together in developing the future.

I am thankful to Donna Wilczek, Stephany Lapierre, Amanda Prochaska, and Sarah Scudder for their inspiration, sparring, and friendship. A special mention goes to my public speaking coach Sarah Elovich who has helped me shape and refine this material.

Of course, no list of recognition would be complete without giving significant credit to my lovely wife Denise whose support has been and continues to be beyond measure. Also, a special mention for our hound brigade who ensure I get out into nature, where many ideas come to light.

Finally, I would like to thank my former colleague and collaborator Stephen Easton for investing, challenging, and helping to bring to fruition the vision of a better procurement.

Background

No plan survives first contact

Helmuth von Moltke, Prussian military commander¹

During a workshop in November 2019, a retail chief purchasing officer (and client) bragged to me about not needing inventory optimization. This executive’s organization had next-day delivery with our suppliers, I was told. They could get whatever they needed in 24 hours.

Four months later, in the middle of the pandemic, I didn’t hear anyone bragging about the benefits of just-in-time.

As the COVID-19 crisis hit its first US spike in March 2020, it became nearly impossible for most businesses, including our retail CPO, to find sufficient personal protective equipment (PPE). Demand far outpaced supply. This same retail purchasing organization sought Kearney’s help to source PPE. We were happy to oblige. Employing our best sourcing capabilities, we managed to secure a decent-sized supply. When we presented our results, the client said that the cost was three times the approved threshold for PPE. Additional approvals were required. Thirty-six hours later, those approvals were secured—but the PPE was no longer available.

I was sad, but not surprised. I watched variations of this story repeat over and over. Procurement organizations continually failed in their ability to secure PPE, hand sanitizer, janitorial services, video teleconferencing services, and all kinds of other indirect items that became major roadblocks to daily operations during the pandemic. I watched companies throw internal people and external consultants at the problem. Over the coming months, thanks to a great deal of hard work, my client and many other organizations weathered the crisis.

But the damage was done—damage to the old-fashioned ways of doing procurement. Everything we’d been told about procurement best practices, processes, talent, technology, and data was at best a fallacy. At worst it had all been outright lies. Twenty years of blind focus on cutting costs and controlling spend caught up with the procurement function.

Before the pandemic, I wanted to write this book as a how-to for digital procurement with a nod toward the future. It would be a guide to the basics of what digital procurement is, from a theoretical and practical point of view. It would explain how to deploy, design, and operate systems in preparation for the procurement organization of the future. COVID-19 eviscerated that intention. I predicted that the future was a freight train heading toward us, but well off in the distance. I was wrong: the train was right in front of us. It hit us full force. The impact did more than highlight weaknesses in procurement organizations—it exacerbated them exponentially. Lack of visibility into spend and/or suppliers, lack of supplier identification, lack of a broader community, lack of capabilities, and lack of leadership all became examples of procurement done poorly. In an instant, the pandemic proved that old operating models need to be ripped up and tossed aside—not at some vague point in the future, but as soon as possible. In their place, a new digital-first procurement organization must emerge.

Over the past decade, many organizations spent a great deal of money on procurement transformations—and their efforts weren’t adequate in preparing for COVID-19. Who was to blame? The strategists or those charged with enacting the strategies? The answer has never mattered. Maybe the strategies were too complex, too theoretical. Maybe the people weren’t up to the task. Or maybe the technology was inadequate. Maybe all of this is true. Nevertheless, unassailably, going forward, we need to do something different. That different is what this book is about. It’s a how-to for building a procurement operations model that will withstand the next major disruption.

Why should you listen to me? Here’s why. I am truly independent. I do not take money or any other compensation from any vendor. I am a strategic advisor for my clients. I have a vested interest in every recommendation. How my clients use any technology that I recommend is part of my investment in every client where I make a suggestion. I stand behind my work and help clients adjust their strategies as they go, based on how their vendors are performing, or failing to perform. So I get a fully completed feedback loop.

I am constantly amazed that vendors pay independent entities to rate them. How silly! Organizations should be able to make that evaluation for themselves.

I have particular expertise in procurement start-ups. I chart the disruptions they create. When I talk to founders, clients, or venture capitalists (VCs), I take no remuneration of any sort. I pay

Reviews for Trade wars, pandemics, and chaos

[vibesjay · Rating: 5 out of 5 stars]

It's great book for anyone who is embarking on their Procurement transformation journey.

[Nila Gani · Rating: 5 out of 5 stars]

Easy to understand the message that the book is offering to the procurement executives.
Not that easy to implement, yet the only way to be part of the new present and future.
It is more a very valuable lesson than a library book and I recommend for everyone related to procurement.