There is much talk currently of circular procurement as an important element of the circular economy. The circular economy is a resource productivity concept. Manufacturers and consumers aim to keep materials useful at the end of their life, for example through repair and re-use in new products. Circular procurement supports this. It is relevant to production purchases, where the whole-life of the product is planned during the early design process. In particular, circular procurement ensures that component parts may be repaired, re-purposed or recycled at the end of their useful life. The benefits to the economy and the environment are clear. With a global population demanding greater resources in terms of infrastructure, goods and food, the approach makes sense.

Circular procurement typically requires a change in procurement mind-set, so that sustainable procurement is the primary focus of the category requirements. So, is it possible for circular procurement to work alongside category management? This table summarizes the features of each:

 

Circular procurement Category management
Sustainable procurement is the primary focus of category needs. Sustainable procurement is one the category concerns, alongside availability, quality, service, cost, innovation and regulatory (AQSCIR) needs.
Supported by collaborative, long-term relationships with suppliers. Supported by a variety of different relationships, to suit the market conditions, supplier relationship and criticality of the purchase.
Outcomes are defined in waste minimization. Outcomes are defined in terms of value to the customer, the organization and the organization’s stakeholders.
Disposal is described in terms of re-use or recycling, because waste is seen as a resource. Disposal could result in items going to landfill.

 

The procurement profession can move towards circular procurement practices by adapting their total cost of ownership (TCO) analyses for goods, materials and consumables purchases. The typical focus of such analysis is whole life cost, which means how much it will cost to acquire, transport, store, use, maintain and dispose of the products. Procurement people can extend TCO assessment into waste minimization, which explores familiar topics like consumption and demand management and environmentally responsible sourcing. Products are also used to support services purchases, such as IT equipment, office supplies or printed / packaging items. A circular procurement evaluation would consider how suppliers manage the end of life of such associated goods, even if they are not part of the actual purchase.

The Ellen MacArthur Foundation, working together with McKinsey, has championed the circular economy concept. This is shaping government debate and has a clear impact on procurement. The Foundation’s publication “Towards a Circular Economy: Business Rationale For An Accelerated Transition (2015) states that “prices…should reflect real costs. In a circular economy, prices act as messages, and therefore need to reflect full costs in order to be effective”. Some organizations like Google and Philips are leading the way in defining their procurement activities around this way of working. They are members of The Circular Economy 100, a group of enterprises, governments and special interest groups committed to the Ellen MacArthur Foundation’s principles.

Using the best in class examples of these procurement teams is a useful first step in understanding the gap to achieving circular procurement. This requires a new approach to measuring the effectiveness of procurement. For example, savings metrics where cost is a sub-element of sustainable supply chains rather than the other way around.

Christmas is a time to do something for other people. Maybe you are looking in on an elderly neighbour or volunteering at a homeless shelter. Individual giving is worthy, as are collective efforts by organizations (and the procurement people that represent them).

Instead of just donating or raffling our suppliers’ Christmas gifts for charity, what if Procurement professionals took a more proactive approach to generate good throughout our supply chains and the communities that are impacted by them? This is pro-social procurement.

Pro-social procurement considers the positive impact of sourcing decisions on the organization, on society, the economy and the environment.

The UK public sector implemented the Social Value Act into its procurement practices in 2010. This tasks commissioners with thinking about the wider social, economic and environmental benefits of their procurement activity. Social Value Awards give recognition to government agencies who have demonstrated best in class performance.
The private sector also has good practice in this area, for example:

  • Tesco offers 14 days payment for suppliers receiving less than £100,000 income from the retailer, so that small organisations can thrive without cash flow concerns.
  • KPMG has a long history of providing wide access for professionals coming into their industry, working with government to support applicants from low income families and other disadvantaged groups.
  • Sovereign Housing Associations supports careers fairs for their social housing residents, enabling them to access work place opportunities within and outside the organisation, in their local community.

Procurement professionals from industry can give a sustainable gift this year by influencing Procurement leaders to adopt at least one pro-social procurement practice for 2017. Here are some ideas:

  • Incorporate social value into your category business needs. For each sub-category where the stakeholder has defined their requirements against availability, quality, service, cost, innovation and regulatory (AQSCIR) needs, encourage them to think about how suppliers in the market could also contribute to the communities they recruit from and the environment they work in.
  • Build cost models alongside small business suppliers, who may welcome coaching in how to establish a sustainable, long term agreement with a reliable corporate customer.
  • Evaluate prospective suppliers based on their evidenced pro-social efforts. For example, how do suppliers support the community, economy and environment through their recruitment, learning, career support and staff charity days.

Pro-social procurement is not about driving suppliers to invest even more cost in order to win or keep your business. It is about building a socially responsible framework around our existing procurement practices so that we do not neglect pro-social elements in our supplier selection, contracting, contract management and performance evaluation.

In this two part article Peter Hunt describes Demand Management as a source of value improvement.  In part 1 we cover the background, context and foundation for Demand Management and in part two we will consider the catalysts and key tools.

Part 1 – Background

Demand Management is not a new concept.  Its origins lie in fiscal management and economic theory wherein demand and supply can be influenced by the level of interest, taxation, the availability of credit etc.

From the late 1970s demand management became increasingly used across many sectors in an effort to balance customer requirements (demand) with the capability and capacity of the supply chain (supply) through forecasting demand and synching with marketing, production, procurement and distribution.

By getting this right the supply chain was able to deliver efficient consumer response and achieve reductions in working capital (inventory), wastage and obsolescence, whilst improving asset utilization and productivity.

More recently the scope of demand management has extended from a focus on volume alone, to incorporate other value levers including specification, (the level or pattern of) consumption, service level, quality, delivery and packaging requirements and the total cost of acquisition and ownership.

One of the foundations for this extended scope of demand management is an objective challenge of the buying organizations’ business needs, i.e. a challenge of their desired or target outcomes in an effort to balance these with the associated value levers to ensure a ‘right-sized’ solution.

It’s this more recent scope of demand management that we will focus on as a source of value improvement.

ADR has worked with many private and public sector clients to design and embed category management processes through coaching and experiential learning.  See example in Figure 1.

Understanding an organizations’ business needs is an essential step early in the process.  This provides important insight to develop the category strategy, define the supplier(s) capability needs and thereafter to manage their performance.  Further, given that business requirements will be influenced by the business climate, stakeholder and consumer direction, technology, commodity markets etc. it follows that redefinition or refresh of the business needs is equally essential during the ongoing management phase to help manage and optimize the life-cycle of the category strategy.

Hence business needs analysis is a prerequisite in strategy development, sourcing and supplier relationship management.

WHAT ARE BUSINESS NEEDS?

The specification and / or a scope of work will form part of the business needs, but in addition we must understand:

  1. The associated needs in relation to e.g. assurance of supply and delivery, quality, service, cost, innovation, risk, regulatory and environmental issues etc., and
  2. Why?

The ‘Why?’ is of critical importance because it leads us to understand the relative priority as well as the desired business outcomes, i.e. what we are trying to achieve from the procurement and what’s driving the demand.  If you were to ask these questions to a cross functional team the likelihood is that you’d receive different responses.

For example, consider cookie tins in the food supply chain.  The cookie manufacturing operations team may prefer standardization of size and shape to optimize plant utilization and efficiency.  Procurement and the supply chain may support this to enable aggregation and scalability benefits and to buffer forecasting and reduce shortage risk.

Marketing on the other hand, may prefer unique shapes, innovative designs and high quality finishes because it regards the tin as advertising collateral – a conduit to strengthen the brand and brand recognition through retention and future use of the tin.

Challenging and unifying these perspectives will create a set of fit for purpose business needs which, together with the other steps in the process, will inform the category strategy.

This concept of challenge using different stakeholder perspectives and desired outcomes and demand drivers lies at the heart of demand management.  At its ultimate conclusion, it allows an organization to place a ‘value’ on individual features or components of a product or elements of a service or process, i.e. to challenge the cost of provision or the benefits derived and, indeed, whether the intended benefits are in fact being achieved.  Consider the examples in Figure 2 to amplify this.

Accepting that the route to clearly and optimally defining desired outcomes requires perspectives from the right stakeholders it follows that engagement / formation of a cross-functional category team is critical.  This is critical both early in the category strategy development (pre-sourcing) phase as well as in the ongoing category management phase, when the focus will be on supplier relationship and performance management and continuous improvement.

In part two of the article on Demand Management, Peter Hunt will discuss the catalysts and some of the key tools to support Demand Management.

In part two of the article on Demand Management, Peter Hunt will discuss the catalysts and some of the key tools to support Demand Management.

WHAT ARE THE CATALYSTS?

This will depend on the stage of the process as well as the organizations’ business environment / priorities.

During the analysis and planning phase of the process, options analysis and challenge is
intended as a step for a cross-functional category team to generate and evaluate options for sourcing, contracting and the future supplier relationship(s).  In relation to ‘sourcing’ options, as well as e.g. the number of suppliers, stage in the supply chain, insourcing, outsourcing etc., it’s important to consider and challenge also the business needs (specification or scope of work and the associated value levers), against the desired outcomes.

A cross-functional category team needs to provide the creative tension that will result from differing functional perspectives and the category lead would typically be responsible for creating the environment to enable this.  Useful tools and techniques include structured or unstructured brainstorming, process mapping, target costing or setting an aspirational or provocative goal to concentrate the teams’ focus on to a common end.

A challenge that can occur at this stage of the process is that a category team may not have been mobilized early enough to effectively inform the specification or scope.  Despite this, there is a significant risk in skipping or post-rationalizing this step and if the category and / or spend is significant enough the category lead needs the business authority to mandate it, even if it means revisiting previous decisions.

The ‘ongoing category management’ phase of the process provides a relevant and more natural environment for demand management.

Stakeholder(s) / business partner(s) are likely to be more actively involved in this phase of the process as relationship managers or performance managers and as such they are more naturally placed to challenge and refresh business needs / outcomes and the associated value levers and to contrast this with the total costs of acquisition and ownership.  At first hand they can place a sense of worth on a product feature, service level, performance or quality standard and make an informed judgement about its associated value for money.

It’s not uncommon for them to have a leadership role but certainly stakeholders / business partners will be a critical component in the process.  Consider for example local authorities with budget cuts being imposed while demand for services remains constant or increasing.

Responsibility for repositioning service provider scope of work (i.e. challenging demand) with reduced contract values has largely fallen on Heads of Service (budget holders) rather than a procurement team.

Indeed, public sector bodies have excelled and accelerated in the area of demand management both in terms of service provision by suppliers and by internal staff, simply because they have needed to balance income and outgoings.  Some examples are included in Figure 3.

The key catalyst in the public sector in recent years is that the Heads of Service have RAA (Responsibility, Authority and Accountability) to manage within budget, i.e. managing a reduced and reducing budget is a fundamental aspect of their job.

This has parallels in the private sector too where there is a sectoral and / or cultural expectation of continuous improvement, e.g. in the information technology and automotive sectors.  In both there exists infrastructure which is in place with dedicated and specialist
resource targeted to deliver continuous improvement, comprising internal staff and supplier (often technical) expertise.  Again, these teams have RAA.

In addition to skilled resource and business support and the tools identified in the early category management phase, there are a number of additional tools which have proven to be useful catalysts in demand management to either avoid, prevent, reduce or change demand in the ongoing management phase:

  • Root cause analysis (RCA) – also known as ‘5 why’s analysis’ or ‘Fishbone analysis’.

Having identified and defined a problem or undesired event or simply a high cost to the business, root cause analysis is used to determine the most probable underlying causes with the aim of formulating and agreeing corrective actions to mitigate or eliminate those causes.

  • Value analysis – also known as ‘value engineering’.

Analysis to identify and select the best value alternatives for designs, materials, processes and systems.  Key question: Can the cost of this item or step or feature be reduced or eliminated, without diminishing the effectiveness, quality, customer satisfaction etc. (i.e. the desired outcome)?  The objectives are:

  1. To distinguish between the incurred costs (actual use of resources) and the inherent costs (locked in costs) in a particular design or solution (and which determine the incurred costs), and
  2. To minimize the locked-in costs.

In summary, while strict formality is not a pre-requisite, there is certainty that the effectiveness of demand management to deliver improvement outcomes will be proportional to the quality and quantity of resource and business support invested – by both the company and its supply chain.  Therefore addressing ongoing improvement in the contracting and selection process with suppliers will provide a necessary foundation.

In an effort then to create momentum and share insights, celebrating and promoting successes is essential.  The scope to deliver value improvement through demand management, especially in the ongoing / supplier relationship management phase of the category management process is significant and often is more effective than simply
re-competing or resourcing.

Supplier selection typically involves a rigorous evaluation of potential suppliers’ capabilities. As well as technical suitability, suppliers may need to provide detailed information about their business operations. Yet even after supplier selection, how well do we really know our suppliers?

We expect suppliers to submit accurate pre-qualification information, but even this can be positioned into the most attractive profile. Or perhaps they were guilty of the sin of omission, concealing failures, weak management or business inefficiencies.

A visit to a (current or prospective) supplier is a great opportunity to get to know them better because so much is on display, intentionally and unintentionally. For example, you can meet a range of personnel that you would not normally meet during the bid process. This could be scheduled or unscheduled, and other functions often reveal much about the organisation’s true position e.g.

  • Operational managers, keen to discuss people, equipment and business continuity.
  • Quality managers, passionate about improvement and anxious about performance.
  • Human resources personnel, revealing how the organisation motivates and rewards people.

Supplier visits are a chance to complete the portrait that was sketched from financial accounts.  Financial accounts may have given you some signals about financial performance such as excess inventory, low wages, complex borrowing arrangements or slow cash flow. Your observations and questions can add a why, how and when to these topics.

Most importantly, supplier visits are an insight into the true culture of an organisation. Your perceptions have been shaped by the team you know. Your visit may reveal that this is not indicative of the whole organisation (for better or worse). The supplier view of you as a customer may mean that you have been allocated a high-performance “A” team, or the lacklustre division serving only your “difficult” demands.

One good way to prepare for a supplier visit is to take part in a supplier visit training simulation. A training simulation is a pre-established case study that allows delegates to plan and execute a visit in a role-play style setting. Supporting data and props bring the simulation to life and enable delegates to explore the obvious (and less obvious) aspects of knowing a supplier. The simulation takes place in teams, which adds competition to the training each team builds a model of the supplier’s operating costs. At the end of the simulation, we find out which team created the most accurate model and got to “know the supplier” better than their peers.

In an age when many procurement professionals are leveraging long term relationships for value, it makes sense to know your suppliers well.

Corporate buyers in Britain are adjusting to a new post Brexit landscape.  Much of their supply base will be impacted by Brexit, whether directly as an EU-based organisation or indirectly if any of their supply chain or employees have an EU profile.  But expert procurement professionals are used to dealing with international procurement scenarios, so will Brexit mean new skills are needed?

Perhaps not new skills, but certainly the post-Brexit buyer should focus their 2017 competency development in the following areas:

Contracting

Discussions over which country law should apply to the legal agreement with the suppliers becomes more impactful now. The European Court is currently the ultimate arbiter of disputes between EU based organisations and EU Law prevails where two EU-based parties have made a purchasing agreement where the governing law is from either of their respective countries. UK buyers should already be considering the impact if this will no longer apply.

In the absence of the European court, another governing body such as the World Trade Organisation (WTO) could ultimately intervene in the event of catastrophic relationship breakdown.  But the comfort of having a common legal framework may vanish. Buyers should therefore evaluate their contracting strategy carefully before commitment to any suppliers.

Total Cost of Ownership

The procurement professional is used to considering the total cost of any supplier proposal in terms of purchase price, logistics costs, and on-going support and maintenance issues. In the Post Brexit world, some of these costs are difficult to calculate right now – for example, will the costs of import, export, tariffs and taxes change?

Buyers should scenario plan multiple total cost eventualities when evaluating potential relationship options with suppliers, and build contingencies into the agreement such as renegotiation or review points. This will help protect all parties who wish to maintain a long term relationship without the disruption of unbudgeted operating cost increases.

Supplier Financial Analysis

Post Brexit buyers should pay careful attention to suppliers’ financial performance. In this period of uncertainty, changes in interest rates, currency valuation and employment law can radically shift the profitability of customer accounts for suppliers. Procurement professionals typically look at financial analysis as a risk management issue (the focus being on supplier solvency). Credit checks are duly undertaken prior to supplier selection, and perhaps annually thereafter for key suppliers.

But in the new post-Brexit landscape, buyers should look at prospective important suppliers’ financial statements to understand the impact of the deal on the suppliers’ business models and what shocks may impact the viability of the deal. Buyers must ensure they are securing an agreement that is sustainable and attractive for both parties.

As Britain gears up to trigger Article 50 in spring 2017, the two-year withdrawal process of the country as an EU member state will commence. Buyers have adequate time to enhance the skills that will help maintain business continuity for their organisations.

Distance training is type of internet-based learning. It is typically real-time and takes place in a “virtual classroom”, often with other colleagues who could be based on many different locations. Participants require a device with internet access to attend the courses, perhaps using a headset (earphones and microphone) so that they can discreetly listen and contribute verbally as well as using the keyboard.

Distance training is popular with organizations seeking “bite size” courses, accessible to many people globally. It is useful for organizations trying to avoid the travel and venue costs associated with classroom training, but who still want learners to have an interactive experience.

ADR International expert tutors deliver virtual training for corporate groups in several languages, bringing our global insight to procurement teams. Our top tips for effective distance training are:

1.  KISS: Keep it Simple (and short!).

Ideally a maximum of 2 hours.

2.  Focus on one discrete topic.

This makes it bite-size and easily digestible in an online format.

3.  Use a virtual training tool.

These applications offer interactive elements like virtual breakout rooms, polls and collaborative whiteboards.

4.  Be human.

The internet is notoriously impersonal. Tutors should be authentic, and ideally humorous.

5.  Keep it moving.

The pace of virtual training is (necessarily) more rapid than classroom, so lots of interaction and progression works best.

6.  Exchange ideas.

Virtual tools benefit from quick capture and share of preferences and opinions without the story-telling involved in a face to face course.

7.  Adapt to cultural differences.

Culture is just as prevalent online as offline. Each group may be more or less likely to share views, challenge or work through puzzles. Amend the content and approach to suit.

8.  Reward attendance

Progress towards accreditation or a certificate of learning are always welcome.

9.  Recognise connection challenges.

Employees may have joined the call from locations with unstable internet connections, or perhaps from a device while they are travelling. Be prepared and be patient.

10.  Record it and publish it internally.

That way, it is available to learners to refresh and reinforce.

There has been much speculation about the impact of Britain’s departure from the EU on jobs, the economy and Britain’s relationship with other nations. Many organizations with UK operations had already started ambitious procurement capability development projects when Britain voted to leave the EU in June 2016. This is our view on the impact of Brexit on procurement skills:

1. A more international outlook

Post-Brexit Britain will seek to make advantageous trade relationships directly with the EU and non EU countries. Prime Minister Teresa May described the outlook in an interview on 4 September 2016, as “an independent Britain forging our own way in the world”. Procurement professionals will need opportunity assessment skills to determine whether new trade relationships with countries outside of their current supply base represent better value for money. Their research could influence business leaders within their industry to request that the UK government supports trade deals with countries of interest.

Knowledge of international trade legislation is going to be important, coupled with skills in negotiation with different cultures.

2. Reduced travel results in greater use of online tools

It is yet unknown whether it will cost more to travel to and from the UK (e.g. due to changes in visa requirements or air passenger duties).  As the International Air Transport Association (IATA) outlined in June 2016, “broadly speaking, the closer the relationship with the EU, the less likelihood that the UK would need to amend air services agreements.”  Higher costs of transport could impact the likelihood of procurement professionals visiting the facilities of overseas suppliers which is essential for practising skills such as cost analysis and evaluation of responsible business practices. Yet reduced travel could also reduce attendance at training courses for these skills.

Online learning like ADR’s Online Supply Chain Academy (OSCA) for procurement eLearning and virtual classroom courses can enable procurement professionals to refresh these skills. Online tools can also support supplier management tasks like evaluation of vendor performance.

3. Total cost of trade requires careful evaluation

The threat of poor trade deals for importing and exporting goods and services will mean that all business professionals need to hone their skills at calculating the total costs of buying and selling overseas. The Institute for Fiscal Studies (IFS) report “The EU single market: the value of membership versus access to the UK” (August 2016) states “Estimates suggest the costs affecting services trade may be over twice those in goods”.

Corporate services buyers will need strong skills in assessing costs such as changes to import duties, labour law and vendors down the supply chain. For example, the UK currently relies on many employees from the EU with a right to work in the UK. If that changes (or the cost to work in the UK changes), suppliers could face higher costs of hiring and wages, longer lead times to recruit staff and a greater reliance on overseas workers from outside the EU who also present working visa cost implications.

Skills shortages that already exist could become more acute and suppliers of labour services could attempt to increase prices in response to these challenges. Expertise in skills such as sensitivity analysis will be required in the evaluation of supplier proposals and in contracting.

4. Long term economic stagnation makes long term contracts better value

Following the Bank of England’s August 2016 inflation report, when the 2017 growth forecast reduced from 2.3% to 0.8%, the British Chambers of Commerce (BCC) observed “While the scale of the downgrade mostly reflects the greater political and economic uncertainty in the wake of the Brexit vote, it is significant that this is the fourth successive inflation report in which the bank’s expectations for UK growth have been weakened – confirming that the UK’s economic outlook was softening long before the outcome of the EU referendum was known”.

If Brexit does mean a long period of low growth for the UK economy, tactical sourcing may yield limited results except for categories in the most competitive of supply markets. Procurement professionals may seek longer term contracts with suppliers, exchanging greater commitment for preferential terms.

Buyers will need to make themselves more attractive to suppliers to secure a quality relationship. Supplier assessment will be a key skill to identify what makes their organization attractive for suppliers.

5. Standardized capability profiles

Global teams have traditionally used a highly regionalized approach to creating job descriptions rather than an international schedule of the desired skills mix for procurement (sometimes known as a competency framework). This often results in regional pockets of procurement skills strength and weaknesses.

In future, there could be a more global approach to capability development to support greater international buying opportunities. This could result in common global competency frameworks, international qualifications and sector-specific procurement accreditation. This could facilitate easy movement and development of procurement expertise, which can elevate skills to a consistent global level.

Conclusion: Brexit means opportunity for procurement skills

More internationalization means less siloed thinking and higher aspiration to apply new skills to collaborative value initiatives. The silo approach is where procurement is overly focused on local requirements and objectives, which can result in a zero-sum game where colleagues argue over who reports overlapping project benefits.

Brexit should remind any world citizen that people have more things in common with each other than not, which is the starting point for any win-win type relationship.

Procurement learning is changing. As younger people enter the procurement profession, they expect training methods that will engage them and enhance their business performance, such as social media, online or classroom games. ADR International delivers classroom and digital procurement training courses to corporate customers around the world, and gamification is an important theme.

Learning games are instructional tools that develop capability through “play”. The games could be in any format e.g. board games, card games, console games, simulations. In the article “Moving Learning Games Forward” (Eric Klopfer, Scot Osterweil, and Katie Salen), the authors cite the elements that constitute a game in the context of learning: rules, goals, feedback, fantasy and fun. These concepts are familiar to games learned in childhood and are essentially relevant for the digital gaming industry. Most importantly, they work in the context of games for school and business education.

Games make use of the elements that game-players find so compelling, such as:

  • point-scoring or moving up levels
  • collaborating to solve a problem
  • time pressure
  • public recognition for “winning”

The concept of games to assist learning is not new. “Serious Games” has been a learning concept since the 1970s, developing into Clark Abt’s book of that name. Education games, particularly for school use, have been available since the 1980s. A 2015 market report by Vertical (“The Serious Game Market”) predicts that the market for learning games targeted at both youth and adult learners will be worth over $5billion by 2020, fuelled by growing demand that will exceed 16% each year.

The Serious Games Initiative’s co-founder Ben Sawyer identified a range of “games with a purpose beyond play” including “games as work” and “games for training” for corporate learners. (“The Taxonomy of Serious Games” developed by Ben Sawyer and Peter Smith, 2008).

ADR’s classroom learning games make use of tactile formats like cards, board games and props for simulation. We have found these formats particularly useful for procurement training and development. Our tutors summarize the reasons for their popularity:

Fantasy elements

  • Simulations allow for a variety of different outcomes, so participants can test the variables they have available and learn by experimentation.
  • Role play and simulation enables the use of different identities and / or behaviors. Being able to look at things from another perspective is essential for procurement people, who spend much time trying to get buy-in from stakeholders and suppliers

Childhood elements

  • Game-playing using fun design and props like cards, game pieces and game boards blends media well – focusing onto the participants’ hands and away from screens seems to switch thinking.
  • “Free play” game elements like drawing evokes memories of childhood games and aims to spark creative thinking and an opportunity to look at colleagues’ perspectives in a new light.

The value of not “winning”

  • Ironically, whilst games lend themselves well to competitiveness, they can also be used to take pressure off learners to “perform” against their colleagues. For example, the use of dice introduces an element of chance; and drawing games reward expressiveness, not intellect.
  • Frankly, something fun is more memorable than something serious in the classroom.

Our tutors have put together their top tips for effective procurement learning games:

Top Tip Number 1: Games should be a trigger for the learning.

It is tempting to finish up a fun game on a “high” but training participants need to bring the learning back to their own working environment and discuss how the game experience was relevant, whether or not the relevance was immediately obvious. The tutor facilitates this using their observations of how the participants interpreted and adapted the game rules.

Top Tip Number  2: Many modern educational games are online, but they don’t have to be.

People like traditional game-playing elements (like cards and boards) as well as online and console gaming. For example, Mojang revealed in 2016 that they had sold over 100 million copies of their top game, Minecraft (available on PC, console, and mobile). But another one of its popular games, Scrolls, is based on collection and swapping of cards (albeit digitally, which can then be used for battle enactment). Using the most popular elements of “traditional” games provides options for using them in classroom learning, or built into eLearning and virtual classroom formats.

Top Tip Number  3: Games should reinforce effective procurement behaviours.

What is it about digital games that they so captivate young learners? Perhaps one reason is that the ability to play anywhere and anytime makes you feel good, because you can master the game quickly. Such games help you to get better because you play repeatedly. Procurement games work well when a similar logic is applied: A particular behaviour or practice learnt in the game becomes a habit that will serve the procurement professional well during their continued discussions with stakeholders and suppliers. For example, a game that helps to inspire creative thinking as part of specification development becomes a normal behaviour in daily working.

As the interest in and application of games extends further into business training, the procurement profession can demonstrate its progressive approaches by making use of gaming options to enrich their personal education. Even better, such games are an efficient and compelling way to educate their stakeholders and suppliers.

 

The Procurement Academy is a framework to accommodate a suite of learning and development offerings to the global procurement community of the organisation. It is often designed with a specific goal in mind e.g. further optimization of spend or driving more value for all parties from existing supplier relationships. What is included in the academy could vary from eLearning courses, skills assessment, scheduled distance learning events, or all of these and more. This “blended learning” concept is important to ensure that individual learning styles, preferences and access to online and offline learning is accommodated.

The Procurement Academy concept has grown in familiarity and scope over the last five years. The procurement academy concept was expanded out of corporate learning and development academies. Many organisations had started to create enterprise-wide online training environments that could host (typically eLearning) content. These were aimed at communicating broad corporate messages such as core values or key policy issues. The opportunity to extend this thinking into functional learning and development meant that departments such as Procurement started to adapt the format, often using the same software tools, to supply-chain specific training.

Many Learning and Development Managers are now responsible for sourcing and development of online content to push onto learning academies, but there is a risk that this reduces the academy to a static knowledge portal. The academy should be the ultimate home of the individual’s learning journey, which may include skills gap analysis and planned activities such as training and on the job learning. This approach supports the 10-20-70 model of procurement learning, where only 10% of learning is formal (such as classroom or eLearning) and the remaining elements are social and informal. The Procurement Academy can support the 20%and 70% with tools like functional social media, knowledge repositories, shared learning events and peer to peer coaching and mentoring opportunities.

The best types of procurement academy enable a match of the function’s capability development progress against the desired capability profile of the organisation, as set by the procurement leaders. In this way, it offers assistance with succession planning so that individuals who could be candidates for future roles receive appropriate interventions to progress towards them. If we neglect succession planning when building the academy, we could end up recruiting solely externally because we failed to adequately develop internal candidates.

An effective procurement academy will be the host of multiple learning modes, but most importantly will emphasise and record self-directed learning activities. It may link to human resources and payroll tools so that line managers can track the continuous professional development of their staff and the associated career progression and rewards.

What is required to start building an effective procurement academy?

  • A capability framework that describes the range of skills required across the department and the different levels of proficiency that may be relevant (depending on role type, location or category). This global infrastructure ensures a common landscape for skills definitions and targets.
  • A future skills profile and what achieving this will mean for the organisational objectives. For example, a profile of problem solving behaviours that emphasises financial literacy could cost analysis and value engineering skills will contribute to a goal of improved cost control.
  • Expertise to build or source suitable content. Content may be a mix of internal and external originated, so it is not only “bought in” but also “home grown” by practitioners. Ideally, content development should be part of the objectives of buyers so that procurement process development is rewarded and recognised. This helps to build processes that are built on real-life category experiences rather than a third party’s generic approach.

The final key success factor for procurement academies is to recognise that the concept builds and grows as engagement and understanding develops in the user base. It is better to quickly get some content in the academy environment that is meaningful and used. It is then possible to monitor take up and understand the response, building more content and functions as required.